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Our briefing for Thursday December 10, 2020:
Dec 10, 2020 4:28:25 PM
- In the United States, the number of COVID-19 deaths in a single day surpassed 3,000 for the first time on Wednesday. The one-day death toll exceeded the number of lives lost from the terror attacks on America during September 11th, 2001. Healthcare experts are pleading with Americans not to gather this holiday season. “No Christmas parties. There is not a safe Christmas party in this country right now,” said Dr. Michael Osterholm, a member of President-Elect Joe Biden’s COVID-19 advisory board. With America hoping to have two vaccines signed up for approval in a matter of weeks, President-Elect Biden has set a goal of vaccinating 100 million people within the first 100 days of his administration.
- In Canada, another day, another record for Ontario. The country’s most populous province recorded 1,983 new COVID-19 cases on Thursday with over half of those happening in the heavily restricted areas of Toronto and Peel Region. Elsewhere in the country, Quebec recorded 1,842 new cases with Premier Francois Legault threatening fines for those who don’t follow the rules. “We cannot allow a minority of people to put the majority at risk,” said Legault. Earlier in the week, the other hotspot in the country, the province of Alberta, imposed tougher restrictions including a mask mandate and ban on social gatherings to get their numbers down. Alberta had 1,460 new cases on Wednesday – only about 500 less than Ontario on Thursday even though they have three times less of a population.
- In the United Kingdom, London Mayor Sadiq Khan has warned his residents the England capital could be subject to the country’s toughest COVID-19 restrictions due to its high case rate. The UK’s tier 3 restrictions include the closure of pubs and restaurants for in-person service. The latest weekly data as of December 6th from Public Health England shows London has a rate of 191.8 cases per 100,000 of the population, the highest of any region in England.
- Germany on Thursday reported a daily record of 23,769 new COVID-19 infections, prompting health officials and government leaders to sound the alarm. The president of the Robert Koch Institute told journalists people need to reduce their contacts by 60% or “other measures” will have to be considered. The president of Germany’s government organization for disease control went on to add the restrictions that have been in place since November 2nd are working when implemented correctly as noted by numbers in certain regions. Chancellor Angela Merkel has called on a full lockdown to be implemented after Christmas – for potentially as long as two weeks in order to bring down infection rates.
- France will lift a six-week-long nationwide lockdown on December 15th, but it won’t be business as usual upon exit. A curfew from 8 PM will be imposed and that will include New Year’s Eve, but Prime Minister Jean Castex said families would be allowed to travel to celebrate Christmas together. Museums, theatres and cinemas will remain closed for an extra three weeks past the December 15th lockdown exit. France’s COVID-19 rate has improved since the country entered its second lockdown on October 30th with new infections dropping from nearly 50,000 a day at the start to around 10,000 now.
- Reuters is reporting India, the world’s largest vaccine maker, is getting set to enter the COVID-19 vaccine race. India manufactures more than 60% of all vaccines sold across the globe, but its $40 billion pharmaceutical sector has been quiet so far with no role in the production of the Pfizer and Moderna COVID-19 vaccines. Indian companies though are set to produce eight more affordable vaccines, including AstraZeneca’s Covishield. “There are many vaccines being produced in countries around the world, but there’s only one nation that has the manufacturing capacity to produce sufficient quantities to satisfy the demands of citizens in every country, and that’s India,” said Australia’s ambassador to India, Barry O’Farrell.
Covid-19 – Due Diligence And Asset Management
Hedge Fund Citadel’s Commodity Investments Up More Than $1 Billion This Year
Brief: Hedge fund Citadel’s investments in commodities returned more than $1 billion this year, according to three people familiar with the matter, helping to drive strong overall performance for one of the world’s largest funds. Citadel, led by Chicago billionaire Ken Griffin, benefited from gains across the commodities business in oil, power, natural gas and agriculture markets this year, the people said. Citadel’s flagship Wellington fund, which practices a multi-strategy array of investments on stocks, bonds, commodities and other securities using teams of traders, is up by 21.2% this year through November, putting it on track to have its best year since 2012, one person familiar with the matter said. All five of the fund’s core investment strategies have positive returns for the year, the person added. A spokesperson for the company declined to comment. Energy markets swung wildly this year as the coronavirus pandemic crushed global fuel demand and created distortions, allowing trading opportunities for hedge funds, oil majors and commodities merchants.
Private Credit Manager Notches Up 55% Return on Pandemic Fund
Brief : AlbaCore Capital LLP is closing the $1 billion fund and managed accounts it set up to invest in beaten-up credits during the pandemic after the strategy yielded a 55% gross return through the end of last month. The turmoil caused when the first wave of Covid-19 infections shook markets in March meant many fundamentally strong borrowers fell into the target price range for its vehicle, known as AlbaCore Investment Opportunities, the London-based firm said in a statement. The strategy paid off as the market rallied strongly when the U.S. Federal Reserve announced purchases of corporate debt and the European Central Bank launched its emergency quantitative easing program. AlbaCore’s managers took a relatively cautious approach, allocating most of their investments to industries such as software, telecommunications and consumer staples that were spared the worst impact of the pandemic, David Allen, the firm’s founder, said in an interview. “We bought a lot of senior secured debt and investment grade securities as low as 60-70 cents on the dollar,” said Allen. “Around 80% of our buying activity was in the safest parts of the market.” Finding an appropriate benchmark to measure Albacore’s fund against is tricky. The firm uses a blend of the S&P European Leveraged Loan Index and Bloomberg Barclays Pan-European High Yield (Euro) Index as a proxy, which generated 1.7% in the year through Nov. 30, according to the statement. The fund does not employ a typical hedge fund strategy and far outstrips the 1.01% returned year to date by an index of credit hedge funds tracked by Bloomberg.
Mnuchin Questioned on Treasury Loan to Apollo-Backed Firm
Brief: Treasury Secretary Steven Mnuchin faced questions on Thursday from a congressional oversight panel over his department’s decision to extend a $700 million loan to a trucking company backed by private equity firm Apollo Global Management Inc. The Treasury Department approved a loan to YRC Worldwide Inc., a Kansas-based shipping company, drawing on funds from the March Cares Act that were intended to help bolster companies critical to national security. The watchdog has raised concerns that the loan could put taxpayer money at risk and that YRC, which ships supplies between military bases, isn’t critical to national security. Congress and outsiders “encouraged us to take losses” on the program, Mnuchin said Thursday at a Congressional Oversight Commission hearing about the national-security loans. “We are not saying this is a market loan. Had it been a market loan, Treasury would not have been involved.” “Fortunately, we’ve made a significant profit” on the YRC deal, Mnuchin said. “I am going to recommend that next year whoever is Treasury secretary seriously look at selling this loan and recovering what I think will be a profit to taxpayers, because this was a success.” Representative French Hill, an Arkansas Republican on the panel, said that taxpayer money is at risk because he didn’t believe that the collateral pool backing the loan was worth as much as Treasury estimates.
Manufacturers Hunt for Deals Amid Pandemic Wreckage
Brief: The COVID-19 pandemic has been a disaster for many U.S. manufacturers, but it is also creating acquisition opportunities. Cary Wood, chief executive of Grede Holdings LLC, saw business plunge 90% earlier this year as the auto plants and heavy equipment producers that use his metal parts shut down, followed by a bumpy recovery. But he’s upbeat these days and, in the last two months, he’s opened negotiations aimed at acquiring seven smaller foundries. “I can wait out the cycle,” Wood said, “but many of these guys can’t. Grede, carved out of publicly traded American Axle & Manufacturing Holdings Inc last year, is backed by a private equity firm and was already hunting for acquisitions before the crisis hit. But Wood said the rate of deal talks is far higher than a year ago, when he was running the foundry company that merged with Grede as part of the buyout. And it is similar to a wave of restructuring he saw just after the 2008-2009 financial crisis. A similar story is playing out across the U.S. economy. A recent survey of leaders of companies with over $250 million in sales found 65% of manufacturers said they planned to make acquisitions in response to economic conditions created by the pandemic. Other sectors show a similar push for acquisitions, though not to the same degree. Only 36% of consumer goods companies said they were looking for acquisitions, while 41% of health care companies said they were on the hunt.
Oil Ascends From Covid Abyss Six After Falling Below Zero
Brief: Oil futures in London blew past $50 a barrel for the first time since the pandemic ground the global economy to a halt in a remarkable rally that few predicted would happen this soon. The return to prices levels not seen since March while the pandemic grinds on represents a startling turnaround for a market that just months ago was brought to its knees by an unprecedented loss of demand. With places to store unused oil running out and low prices pushing U.S. shale drillers into bankruptcy, OPEC and its partners collaborated to stanch outflows and stabilize markets while the world awaited a vaccine. Announcements last month from Pfizer Inc and others that safe vaccines could be rolled out by spring, lending a crucial boost to global demand for fuels, provided the boost that was needed to send crude spiraling above $40. Futures in London rose as much as 4.5% Thursday. Asia continues to lead the rebound in physical demand with robust purchasing by China’s private refiners. A top Indian processor has issued multiple tenders to acquire oil. The U.S. dollar also weakened, which raised the appeal for commodities priced in the currency. Still it appears the suddenness of Thursday’s rally caught some oil watchers off guard. “I am a bit surprised that it happened now,” said Bart Melek, the head of global commodity strategy at TD Securities. “I have been advocating $50+ Brent, but I thought that would happen after we see inventories and demand look better.”
Omers Tells Staff They Can Remotely Work Through March
Brief: Ontario Municipal Employees Retirement System, the pension fund for local government workers in Canada’s largest province, told staff they may continue working remotely until March 31. The policy applies to employees who have the ability to do their jobs from home. “We recognize and thank our colleagues whose roles require them to be on site and who’ve been going into the office for the duration of the pandemic,” said a memo signed by Rodney Hill, Omers’s chief risk officer, and Dean Hopkins, chief operating officer of its real estate investment arm, Oxford Properties Group. “Ultimately, we’re an office-based culture,” the two executives said, adding that Omers plans to reopen its office when conditions allow. The Toronto-based pension fund managed C$109 billion ($85 billion) as of the end of 2019. Canada became one of the first countries to approve a vaccine from Pfizer Inc. and BioNTech SE on Wednesday, but will have limited quantities at first. Prime Minister Justin Trudeau has said the government expects a majority of the population will be able to get a vaccine by September. “We continue to monitor our approach, adjust as needed, and expect to work this way until at least March 31, 2021, when we will re-evaluate based on conditions,” Omers spokesperson Neil Hrab said. Financial institutions on Wall Street and beyond have delayed return-to- office plans as coronavirus cases have spiked. Some, including Deutsche Bank AG and Nomura Holdings Inc., are weighing or have decided on making flexible work arrangements permanent.
