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Our briefing for Thursday January 21, 2021:
Jan 21, 2021 4:16:00 PM
- In his first full day in office, United States President Joe Biden has launched sweeping changes on how America will deal with the coronavirus. Where the Trump administration left much of the pandemic handling to individual states, the Biden administration will be aiming a coordinated federal response, focused on boosting vaccines, increasing testing, reopening schools and addressing inequalities highlighted by the pandemic. The Biden administration will invoke the Defense Production Act, which will expand vaccine manufacturing and its power to purchase more vaccines and the President will sign a series of executive orders, including mask-wearing in airports and on certain public transportation.
- In Canada, the Canadian Federation of Independent Business (CFIB) said more than 200,000 businesses could close permanently due to the COVID-19 pandemic. The CFIB said Thursday the latest figures are from a survey sent to its members that show one in six, or about 181,000 Canadian small business owners are now seriously contemplating shutting down. Based on the CFIB update forecast, more than 2.4 million people could be out of work – representing 20% of private sector jobs. In 2020, 58,000 businesses became inactive in the country, according to the CFIB.
- Speaking on a BBC radio program, a United Kingdom government scientific adviser said pubs and restaurants in the country should not open before May. Dr. Marc Baguelin, who sits on the Scientific Pandemic Influenza Group on Modelling (SPI-M), a sub-group of Sage, said the premature opening of the hospitality sector could lead to a lot of pressure on hospitals and “another wave of some extent.” Elsewhere in the UK, scientists are urging people in the country to invest in wearing medical-grade face masks as concerns grow over highly contagious COVID-19 variants. Medical-grade face coverings were originally to be reserved for health workers, but French health officials believe many cloth masks don’t guarantee protection against the new variants.
- The European Union (EU) is joining in Canada’s frustration with drug maker Pfizer as they plan to cut deliveries by as much as half to some EU countries. Romania, Poland and the Czech government are bracing for the disruption to last weeks. Italy might channel their frustration into legal action, threatening to do so after being told to expect a 20% cut next week, after reducing this week’s supply by almost 30%. Pfizer and their German partner BioNTech have declined to comment on the cuts beyond their statement last week, which announced the decrease in deliveries as they ramp up manufacturing in Europe.
- Reuters is reporting India’s government has cleared commercial exports of COVID-19 vaccines with the first recipients set to be Brazil and Morocco as of Friday. The Indian government was holding off on exporting doses overseas until it began its own immunization program last weekend. Earlier in the week, India sent free supplies to neighbouring countries including Bhutan, Maldives, Bangladesh and Nepal. The inoculation developed by AstraZeneca and Oxford University are being manufactured at the Serum Institute of India, the world’s largest producer of vaccines.
- China plans to impose strict COVID-19 testing to travellers during the Lunar New Year holiday season. The festive celebration, even in the middle of a pandemic, is expected to draw tens of millions of people to travel. In a notice posted online, China’s National Health Commission said people returning home to rural areas from other provinces would have to produce a negative COVID-19 test taken within seven days. New infections are at their worst point in China since March 2020, which has caused the country to rush to build a massive quarantine camp that can house more than 4,000 people. The camp is located on the outskirts of Shijiazhuang, the provincial capital of Hebei province, which surrounds China’s capital, Beijing.
Covid-19 – Due Diligence And Asset Management
BlackRock CEO Says U.S. Must Roll Out Vaccines Aggressively
Brief : The best measure of success for the new U.S. government of President Joe Biden will be the speed at which it rolls out COVID-19 vaccines, BlackRock Chief Executive Larry Fink said on Thursday. Speaking at online event organized by a business forum linked to Italy’s G20 presidency, Fink said he was confident the new administration would focus on sustainability in the first 90 days and smother any tensions with other countries. It’s about ... have America stand again for the principles of democracy ... and multilateralism ... and at the same time be aggressive and forthright in terms of the rollout of the vaccination,” the head of the world’s biggest asset manager said. Fink said it was a priority to rebalance the economy given the uneven impact of the pandemic across different sectors, but that could not happen until the population reached herd immunity and industries built on “aggregation” could be revived. “The economy will accelerate ... (once) we feel safe and secure again,” he said.
Amazon Offers Assist with US COVID-19 Vaccine Distribution
Brief: Amazon is offering its colossal operations network and advanced technologies to assist President Joe Biden in his vow to get 100 million COVID-19 vaccinations to Americans in his first 100 days in office. “We are prepared to leverage our operations, information technology, and communications capabilities and expertise to assist your administration’s vaccination efforts,” wrote the CEO of Amazon’s Worldwide Consumer division, Dave Clark, in a letter to Biden. “Our scale allows us to make a meaningful impact immediately in the fight against COVID-19, and we stand ready to assist you in this effort.” Amazon said that it has already arranged a licensed third-party occupational health care provider to give vaccines on-site at its facilities for its employees when they become available. Amazon has more than 800,000 employees in the United States, Clark wrote, most of whom essential workers who cannot work from home and should be vaccinated as soon as possible. Biden will sign 10 pandemic-related executive orders on Thursday, his second day in office, but the administration says efforts to supercharge the rollout of vaccines have been hampered by lack of co-operation from the Trump administration during the transition. They say they don’t have a complete understanding of the previous administration’s actions on vaccine distribution.
Wall Street Gets Frugal With Employees After Pandemic Windfall
Brief: Deluged by client orders and often working from home, Goldman Sachs Group Inc.’s workforce generated 15% more revenue per employee during the tumult of 2020. But as the year wound down, the firm had spent an average of just 2% more on each person. Inside JPMorgan Chase & Co.’s investment bank, revenue per employee surged 22%. The figure for pay: up 1%. For months, the question has hung over the industry: How would investment banks reward workers hauling in a windfall during a pandemic spreading pain and economic disparity? The answer -- at least broadly -- is not so lavishly. While few big U.S. banks disclose figures revealing how they compensated Wall Street-oriented workforces, the few that do offered striking snapshots of restraint. Even companywide figures at major banks hint at similar trends. And no wonder: Earnings reports in recent days underscored anew how hard 2020’s tumult battered other business lines such as lending, where banks stockpiled tens of billions to cover bad loans. Despite the flurry of activity on Wall Street, total revenue at the nation’s six banking giants was little changed last year. The group boosted average pay per employee by a mere $271. Now those same firms are bracing for tougher times in Washington, where Democrats skeptical of large financial-industry paychecks are ascendant. From President Joe Biden’s recent picks of veteran watchdogs -- such as Gary Gensler for the Securities and Exchange Commission and Rohit Chopra for the Consumer Financial Protection Bureau -- to his focus on inequality, there are signs the industry faces both tougher scrutiny and regulation.
Cybersecurity, the Cloud and Covid-19: Facing the Challenges Head-On
Brief: The coronavirus pandemic has brought considerable challenges to the way hedge funds and asset management firms do business, with far-reaching consequences for cybersecurity, data safety and business communications. The need for fully flexible working around the pandemic continues to change. Collaboration tools have been key to successful working environments as staff need to work in the same way and securely, regardless of location.In the early stages of the pandemic, the major tech challenges centred around endpoint security. Individuals may have been using personal devices for professional purposes, and the prevalent model was of decentralised security and centralised data. We no longer look to secure a network or server in the same way. Endpoint security is now key, and every device needs security protection. With so many entry points to firms' applications and data, managing the security at the end point has been at the forefront since early 2020 across the sector. These challenges have generally been overcome across the market, and RFA has been ahead of the curve with our MDR and AI tools. Most of our clients were already using an iteration of the cloud to harness their data, but some have advanced their programmes to embrace what the cloud can offer in terms of data management. RFA have always been supporters of a public or hybrid cloud offering, and by having our own Security Operations Centre (SOC) we offer an end-to-end secure cloud-based solution to our clients which has helped them – and us – during the upheaval of the past 12 months. The hedge fund community faced the challenges of 2020 head-on, and I have every confidence that it will do the same through 2021.
Covid Crisis Spurs 30 Per Cent Jump in M&A Activity Targeting Enterprise Software, says Hampleton Partners Report
Brief: The latest Enterprise Software M&A report from Hampleton Partners, an international technology mergers and acquisitions adviser, reveals that the number of deals targeting enterprise software assets has jumped, with 836 deals recorded in the second half of 2020 compared to 641 deals in the first half of the year. Total transaction value disclosed across all deals in the space was also sky-high, reaching USD112 billion – the highest amount on record. Valuation multiples remain healthy but have dipped slightly: the trailing 30-month median EV/S multiple came in at 3.4x, while the EV/EBITDA came in at 14x. This is possibly because the pandemic motivated sellers to decrease pricing to a more appetising level for buyers earlier this year. Meanwhile, the second half of 2020 saw the highest recorded share of private equity and financial buyer transactions: 38 per cent of all deals were carried out by financial buyers, up from 34 per cent in 2018 and 33 per cent in 2019. Miro Parizek, founder, Hampleton Partners, says: “The new circumstances and challenges around Covid-19 have created opportunities for software services.
State Street to Eliminate 1,200 Jobs
Brief: State Street Corp. is preparing to lay off staff, a plan revealed about a month after media reports that the firm is considering a sale of its asset management business. During an earnings call on January 19, State Street’s chief financial officer said that the firm is eliminating about 1,200 positions, mostly in middle management. Last month, Bloomberg and the Wall Street Journal reported that the firm was exploring options for its State Street Global Advisors, including a possible sale of the more than $3 trillion asset manager to UBS Group. The roles State Street plans to eliminate are primarily a result of changes to its operating model and business process, as well as automation, Brendan Paul, a spokesperson for the firm said in an email Wednesday. According to Paul, the employees whose roles have been eliminated will be entered into State Street’s talent pool and may be “redeployed” to new roles. “At the onset of the pandemic, we committed to suspending headcount reductions through 2020 in order to provide our employees with some security during a time of tremendous economic uncertainty,” Paul said. At that time, the company built an internal talent network, which helped to keep more than 3,000 employees working for State Street in 2020, Paul said. State Street expects to spend $82 million on employee severance charges, its financial highlights report shows. During the earnings call, State Street’s president and chief executive officer Ronald O’Hanley declined to comment on “market rumors,” but he did say that the firm’s asset management business is strong thanks to organic growth. “We see the world evolving, and therefore we need to think about how to add capabilities, both product and distribution capabilities, or distribution access to this,” O’Hanley said. He added that the firm would “continue to look at inorganic activities” for State Street Global Advisors.
