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Our briefing for Thursday, March 3, 2022:
Mar 3, 2022 4:27:04 PM
- The United States Centers for Disease Control and Prevention (CDC) as of this week, no longer recommends universal case investigation and contact tracing. Nearly two years after the CDC first recommended the use of 100,000 contact tracers track the origins of infections, the agency no longer considers the process necessary. Instead, the CDC is encouraging health departments to focus their contact tracing efforts on high-risk settings such as long-term care facilities, jails and prisons, and shelters. Contact tracing in almost half of U.S. states has already ended as new cases nationally continue to drop. “This is a big change,” Crystal Watson, a senior scholar at the Johns Hopkins Center for Health Security said. “It does reflect what’s already happening in states and localities, particularly with Omicron. There was no way contact tracing could keep up with that. Many of the cases are not being reported, so there’s no way of knowing the incidence.” The original aim of the contact tracing was to make sure that those who came in close contact with an infected person isolated until they were tested. But due to long delays in processing tracing information and large parts of the population having full or partial immunity, the contact tracing has less of an effect on reducing new infections.
- Earlier this week, Canada eased travel restrictions for people entering the country. For over a year, the federal government required anyone crossing the border into Canada to show proof of a negative molecular test taken within 72 hours of their intended entrance. With the new regulations, a rapid antigen test can now be taken instead of the molecular test such as a PCR. These rapid tests typically cost under $100, and results are available within minutes. The new rapid test must be taken within a day of the departing flight or land crossing. However, common rapid tests that are available locally are not sufficient for re-entry, to be allowed across the border, the tests must be given by an authorized source outside the country. “It can't be the take-home tests that we've seen here in our communities,” said Denis Vinette, vice-president of the Canadian Border Services Agency’s (CBSA) Travelers Branch. “It has to be done through a lab that will give you then the [written] confirmation that you are either negative or positive.” Still, many travelers and border towns are arguing that pre-arrival testing needs to end. “You still have to go through the hassle of clicking the box, making the appointment, finding a pharmacy that is available,” Windsor Mayor Drew Dilkens said at a news conference. The Canadian government has said that the requirement will end only when current conditions have improved.
- A study conducted in the United Kingdom has found that two doses of the Pfizer BioNTech or Moderna Covid-19 vaccines provide little resistance against symptomatic illness from the virus after six months. However, a booster shot, or third dose was able to greatly improve protection. The study suggests that the Pfizer vaccine dropped to 8 per cent effectiveness down from 65 per cent in a six-month period after the primary vaccine series and the Moderna vaccine dropped to 15 per cent, down from 75 per cent. The boosters were able to bring the effectiveness back up to primary levels, but also begins to wane after a two-month period. The study, funded by the U.K. Health Security Agency, found that while the vaccines offered relatively weak protection against minor illness from Omicron variant, it was still extremely effective at preventing severe illness or death. The authors of the study highlighted the importance of a third dose and said that a booster provides a “rapid and substantial” increase in protection.
- The World Health Organization (WHO) reported that new Covid-19 cases have dropped 16 per cent globally in the last week and deaths resulting from the virus had fallen 10 per cent. Despite the drop in cases, the WHO repeated its claims that the pandemic was not yet over, and the new variants can still arise if the virus is allowed to spread unchecked. On Thursday, French Prime Minister Jean Castex announced that the country will soon end its mandatory face mask mandate, except for on public transit, and vaccine health passes will no longer be required for entering public venues. Proof of vaccination will still be required for entry into French hospitals, health centers and retirement homes, Castex said. "The situation is improving thanks to our collective efforts, thanks to the measures we have taken," the Prime Minister told TF1, a free-to-air television channel. New cases in France dropped to just over 53,000 down from 70,000 the previous week. Hospitals in the country are seeing a drop in patients in intensive care units, with 2,329 beds currently being occupied.
- Authorities in Hong Kong reported a new daily record of confirmed cases of Covid-19 on Thursday with 56,827 new infections. In February daily cases were numbering in the hundreds, and the rapid outbreak has the Chinese-ruled city on high alert. So far, the city has not swayed from the Covid-Zero stance it has taken since the early days of the pandemic, where authorities are trying to stamp out the existence of the virus altogether. Hong Kong's Transport Department has halted 98 bus routes as the operator combats critical manpower shortages and fewer people are leaving their homes. In a statement released on Thursday, the Transport Department said that stringent social distancing measures and a rise in infections has made it difficult to continue normal operations. Similarly, the city’s subway operator, MTC Corp has said it will be cutting 8 lines in coming days due to passenger and staff shortages. Health experts from the University of Hong Kong estimate a peak of nearly 183,000 daily infections is expected sometime in the coming week.
Covid-19 – Due Diligence And Asset Management
WisdomTree targets post-Covid recovery with four sector-focused ETPs
Brief: WisdomTree has unveiled four sector-focused thematic ETPs that will seek opportunities in the post-Covid recovery, as well as the energy transition. The ETPs consist of two leveraged and two short/inverse exposure funds to STOXX Europe 600 sector indices, including Travel & Leisure, Automobiles & Parts, and Oil & Gas. Pierre Debru, head of quantitative research and multi asset solutions, Europe, for WisdomTree, said: "Our new launches give investors an even wider suite of products to choose from to express their investment views on the post-Covid economic recovery and the inevitable energy transition megatrend." The funds listed on the London Stock Exchange, Borsa Italiana and Borse Xetra today (2 March), and have management expense ratios of between 0.80% and 0.85%. According to WisdomTree's head of Europe, the launches are designed to complement the firm's existing range of tactical products and are "specifically designed to help investors navigate dynamic financial markets and challenging economic climates".
Corporate CFOs Take a Page from the PE Operator’s Playbook
Brief: CFOs who work alongside their procurement officers can dramatically improve their EBITDA through procurement-related optimization, mitigate risk through supplier resiliency and achieve a competitive advantage in the marketplace. Thanks to inflation, labor shortages and supply chain woes, corporate CFOs are grasping for strategies to enhance revenue and mitigate risks. And, like the virus, the financial situation stemming from the pandemic is lingering longer than many expected. To strike back, CFOs are taking a page from the private equity playbook and turning to procurement as major lever for EBITDA improvement. Instead of viewing procurement as a back-office function, CFOs are embracing many of the same complex procurement strategies PE firms have relied on for years to make quick improvements in a portfolio company’s finances. Now, leaders see what good looks like, and more companies are starting to catch on and adopt this fool-proof cost optimization method.
Are The Good Times Over? Startup Valuations Dip As Inflation, Geopolitical Issues And Pandemic Concerns Swirl
Brief: While last year was a record-breaker in terms of venture capital doled out to startups, this year is trending to be a much different story. Geopolitical tensions, inflation, expected interest rate hikes, and a seemingly never-ending pandemic are starting to affect the private markets, venture capitalists say. While the effects on the public market are obvious—the Dow Jones Industrial Average is down about 7.5 percent and the Nasdaq Composite, a good indicator of tech prices, is down about 13.5 percent since the start of the year—getting a gauge on the private markets is more difficult. However, those in the industry say although deals are being made, valuations are coming off the highs of last year, and some companies are reevaluating their fundraising efforts. “If you are a special company, you are still getting the valuation you want,” said Mark Sherman, managing director at Telstra Ventures. “But I would say the more ‘meat and potato’ companies are probably down 20 percent in January-February in relation to November-December—some more, some less.”
Virtual underwriting is here to stay for PE fundraising, says Capstone survey
Brief: Virtual underwriting has become a permanent fixture in private equity fundraising according to a new survey of global LPs, conducted by placement agent Capstone Partners. The survey, which seeks to explore how current underwriting trends impact LP’s ability to make commitments to private equity funds, shows that virtual underwriting has been fully adopted by LPs, with the vast majority virtually underwriting re-ups in 2021, and a comfortable majority virtually backing managers they know well or had met pre-Covid. Just 9 per cent of the 130 global investors said that they had not used virtual processes to underwrite re-ups in 2021. Moreover, the survey highlights how virtual underwriting is now also a valid option for backing new GP relationships, with just 14 per cent of global investors expressing reluctance to use it. North American and European LPs are the most comfortable, with just 3 per cent and 12 per cent respectively unwilling to use virtual processes in new relationships.
Hedge Fund Stock Pickers Return in Force Amid Chaos-Laced Markets
Brief: The upending of markets by shifting central bank policy, war and the pandemic is convincing professional investors the time is ripe to put their often-maligned stock-picking skills to work. Hedge funds that make both bullish and bearish equity bets became big buyers of shares in individual companies in February for the first time in four months, prime broker data compiled by Goldman Sachs Group Inc. show. The amount of net purchases in single stocks reached the highest level in the past year. The strategy is far from without its risks in a market being whipped around as violently as this one by war in Europe and anxiety about inflation. As often happens when big, world-changing headlines are moving indexes minute-to-minute, correlations among individual stocks have risen substantially recently.
