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Our briefing for Thursday October 15, 2020:
Oct 15, 2020 3:49:18 PM
- In the United States, data is starting to reflect what other countries around the world are already experiencing: the beginning of a second wave. According to Covid Tracking Data, 46 states and Washington D.C. have seen their case trend worsen from where it was a month ago. At the end of September this statement was true for 32 states and at the end of August, only 15 states were seeing an upward trend. The United States are closing in on eight million total cases and have over 217,000 deaths due to the coronavirus. The uptick in numbers is concerning as well with the country’s national election just under three weeks away.
- The Pan American Health Organization (PAHO) have a warning for Canada when it comes to the coronavirus. “Canada is currently facing its second wave", and areas that were not previously affected are now surpassing the numbers seen during the first wave, said Carissa Etienne, director of the PAHO and World Health Organization’s regional director for the Americas. During its peak back in April, Canada was experiencing roughly 1,700 daily cases based on a weekly average. In just under the last two weeks, Canada has averaged more than 2,000 new cases a day. Nearly 80% of the country’s cases stem from its two most populous provinces – Ontario and Quebec.
- In the United Kingdom, seven regions, along with London will be moved into the country’s tier 2 status of coronavirus restrictions beginning midnight Friday. The move into tier 2 will place a ban on gatherings between separate households indoors. Essex, Elmbridge, Barrow-in-Furness, York, Northeast Derbyshire, Erewash and Chesterfield are the other areas that will be affected. Health secretary Matt Hancock added no decisions have been made about further restrictions, which is important as Greater Manchester has balked at Prime Minister Boris Johnson’s tiered system approach. Nine of the 10 Greater Manchester council leaders are members of the opposition Labour party and refused to agree to the measures. Johnson’s government has the power to impose restrictions, which include closing pubs and other businesses, but are reluctant to do so without local support.
- In Wednesday evening’s televised address, France President Emmanuel Macron imposed a strict 9PM-6AM curfew for Paris and eight other large French cities in hopes of slowing down the latest wave of the coronavirus. The new restrictions are expected to be in place for six weeks and are among the most drastic put in place since the new outbreaks began. The French cities under the curfew will allow essential workers, including people on night shifts to move around, but those caught without permission will face a fine of €135 on their first offence and as much as €1,500 for repeat offenders. Realizing what this curfew will do to some businesses, the French government also announced a further €1 billion of aid to employers during this six-week stretch.
- In Australia, New South Wales Premier Gladys Berejiklian said a coronavirus cluster in a Sydney GP clinic has caused the region to hold off on easing restrictions. The cluster is similar to the outbreak that hit Crossroads Hotel in Victoria state, which was ground zero for what caused the country’s second largest city Melbourne to enter into a strict lockdown. On Wednesday, New South Wales recorded more locally acquired COVID-19 cases than Victoria state. New South Wales chief health officer said authorities were dealing with “hundreds” of potential close contacts and multiple venues in regards to the latest cluster.
- Two of Asia’s premier financial hubs – Singapore and Hong Kong – have agreed to open their borders to one another. The move marks the first time travel will be happening between the two countries in almost seven months. Compulsory quarantines will be replaced with compulsory coronavirus testing and the Singaporean transport minister hopes the bubble can start in a matter of weeks. Hong Kong’s commercial and economic development minister said business travelers will get priority in the initial stages and arrangements could be adjusted if the pandemic improves or worsens.
Covid-19 – Due Diligence And Asset Management
Stocks Fall on Wall Street as Coronavirus Spreads in Europe
Brief: Stocks are falling on Wall Street in afternoon trading Thursday, extending the market's pullback this week as optimism that Congress will deliver another round of stimulus for the economy wanes and new data show another weekly surge in the number of Americans seeking unemployment aid. The S&P 500 was down 0.7%. The benchmark index is now on track for its first weekly loss in three weeks. The selling was widespread, with technology, health care and companies that rely on consumer spending driving the decline. The pullback follows a broad sell-off in markets overseas as rising infections in Europe led governments in France and Britain to impose new measures to contain the coronavirus. Treasury yields were lower, while the price for U.S. crude oil also headed lower. The Dow Jones Industrial Average was down 141 points, or 0.5%, to 28,379 as of 12:15 p.m. Eastern time. The Nasdaq composite dropped 1.2%. The Russell 2000 index of small-cap stocks was off 1%. Stocks have been mostly climbing this month, but have pulled back this week as talks between Democrats and Republicans in Washington over another economic stimulus package drag on, dimming investors’ hopes for a deal that can deliver more aid for the U.S. economy in the near term.
Investment Industry Must Come Together to Help Young People Through Covid-19 Crisis
Brief: Investment managers should come together to provide high-quality work placements for 16-24-year olds on Universal Credit, Investment20/20 says, following the launch of a new initiative in support of the Government’s GBP2 billion Kickstart scheme. Investment20/20, the Investment Association’s talent solution for the industry, is encouraging investment managers to join its new initiative aimed at facilitating Kickstart’s six-month work experience for 16-24-year-olds on Universal Credit and at risk of long-term unemployment. As part of the scheme, Investment20/20 will act as a conduit for the Department for Work and Pensions (DWP) to pay the National Minimum Wage to each participant for 25 hours a week of work. Investment20/20 is providing an industry solution for investment managers looking to participate in the Kickstart scheme, by providing resources and support to young people with no background knowledge of the industry, and enabling firms to offer work placements to fewer than 30 young people - a requirement to engage with DWP directly.
Wall Street Set for First $100 Billion Trading Year in a Decade
Brief: Working from home hasn’t slowed down Wall Street’s trading desks. The five biggest U.S. investment banks are on pace for their first $100 billion year for trading revenue in more than a decade. In just three quarters, they’ve already generated almost $84 billion, more than any full year since 2010. Sell-side traders have ridden a wave of activity as markets plunged at the start of pandemic-spurred lockdowns before embarking on dramatic rebounds. Trading gains since the start of the pandemic have helped offset weakness in consumer businesses at the nation’s biggest banks, where loan-loss provisions piled up in the first half of the year. Capital markets units have “really been the bright spot as far as revenues have gone since the pandemic started,” Jeff Harte, a bank analyst at Piper Sandler, said in a Bloomberg Television interview. “It’s been pretty good earnings, at least from the big banks.” JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley all saw trading revenue surge more than 20% for a third straight quarter. The totals weren’t as staggering as the second quarter, which was a record for modern Wall Street’s trading and dealmaking units, but they helped lift Goldman to record per-share earnings and Morgan Stanley to its second-highest profit ever.
Appetite for ESG Accelerates During Pandemic: Royal Bank of Canada Survey
Brief: New research from RBC Global Asset Management shows that three out of four (75%) institutional investors now incorporate ESG principles into their investment process, up from 70% last year. An increasing number of institutional investors believe ESG integrated portfolios are likely to perform as well or better than non-ESG integrated portfolios compared to 2019, going up from 90% to 97.5% in Canada, from 92% to 96% in Europe and from 78% to 93% in Asia. However, while most markets are embracing ESG, investors in the US appear more sceptical. Only 74% of US respondents believe ESG integrated portfolios perform as well or better, down from 78% in 2019, while a quarter believe they perform worse. The coronavirus pandemic has helped boost interest in ESG, with investors becoming more aware of environmental and social factors. More than a quarter of institutional investors (28%) said covid-19 has made them place more importance on ESG considerations. Meanwhile, more than half of institutional investors are looking for companies to disclose more details about worker safety, employee health benefits, workplace culture and other social factors due to the pandemic.
Value Fund Manager AJO with $10 Billion Assets to Shut Business
Brief: Quantitative fund manager AJO Partners, which manages $10 billion, said on Wednesday it will shut at the end of the year after “lingering viability concerns” from its clients. Performance data on the fund's website here showed a number of its funds were down sharply for the year to Sept. 30, with its Large Cap Absolute Value strategy, which has more than $5 billion, down 15% and Small Cap Absolute Value down 21%.“Our relative performance has suffered because our investment edge, our “secret sauce,” is at odds with many forces driving the market,” founder Ted Aronson said in a memo provided by a company representative to Reuters. “However, the drought in value — the longest on record — is at the heart of our challenge.” Aronson wrote the length and the severity of the headwinds “have led to lingering viability concerns among clients, consultants, and employees.” Value stocks or shares of economically sensitive companies have been among the laggards in the market’s rally from its lows in March. Related sectors such as retail have struggled as their business models get disrupted in a shift to a more tech-driven world.
Wells Fargo Fires Over 100 Employees for COVID-19 Relief Fund Misuse
Brief: Wells Fargo & Co WFC.N has fired about 100 to 125 employees for unethically availing themselves of coronavirus relief funds, according to a source familiar with the matter. The bank believes some of its staffers made “false representations in applying for coronavirus relief funds for themselves”, defrauding the U.S. Small Business Administration, David Galloreese, head of Human Resources, said in an internal memo seen by Reuters. The abuse was tied to the Economic Injury Disaster Loan program and outside the employees’ roles at the bank, the memo said, adding Wells Fargo will cooperate fully with law enforcement. “These wrongful actions were personal actions, and do not involve our customers.” Bloomberg first reported the news earlier in the day. Last month, JPMorgan Chase & Co JPM.N dismissed several employees who allegedly misused funds that were supposed to help businesses dealing with the COVID-19 pandemic, the Financial Times reported.
