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Our briefing for Tuesday April 13, 2021:
Apr 13, 2021 3:50:12 PM
- The United States’ Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA) out of what they are calling an “abundance of caution”, have recommended pausing the Johnson & Johnson COVID-19 vaccine. The United States recorded six reported cases of a “rare and severe” type of blood clot out of 6.8 million doses of the vaccine administered in the country. All six of the cases occurred among women between the ages of 18 and 48 and symptoms occurred 6 to 13 days after vaccination, according to a joint statement from the CDC and FDA. The White House was made aware of the decisions from the CDC and FDA to pause the use on Monday evening, but the Biden administration played no part in the decision, according to COVID-19 response coordinator Jeff Zients.
- In Canada, the federal health regulator said it was working with Johnson & Johnson, along with the United States’ CDC, FDA and other international regulators to provide more information on any cases of the rare blood clotting events caused by the COVID-19 vaccine. Canada had approved the one-shot Johnson & Johnson vaccine, but deliveries were not due to start until the end of April. Elsewhere in the country, Prime Minister Justin Trudeau admitted during a news briefing on Tuesday that Canada’s recent fight with spread of COVID-19 variants is threatening the progress made by vaccinations. The country is now in a race with the variants overtaking the pace of vaccination with Canada expected to import enough doses to ensure every citizen can receive a shot by the end of June.
- While some United Kingdom residents enjoyed some of the freedoms of “Manic Monday”, Prime Minister Boris Johnson tried to issue a dose of reality on Tuesday. Prime Minister Johnson warned that rapid drops in COVID-19 deaths was largely due to the three-month lockdown that was put in place by the government and not the vaccination programme. Also, as the country begins to open up again, expect the COVID-19 case count to rise once again. Despite the warning, the prime minister noted there was no reason to change the roadmap for reopening the economy. The United Kingdom trail only Israel in the proportion of the population to have received at least one dose of a COVID-19 vaccine.
- In Germany, cabinet members have approved legal changes to grant the federal government more power to enforce coronavirus regulations in all German states. The changes made to the German Infection Protection Act now must be passed in parliament, the Bundestag. If given the green light, the new rules would allow Chancellor Angela Merkel’s government to install a “federal emergency brake” to any region in any state with a high incidence of COVID-19 cases and legally required to implement a uniform set of rules outlined by the federal government.
- India, recognized as one of largest drug manufacturers in the world, is turning to imports to help out with their COVID-19 vaccination programme. On Tuesday, India’s government said it would fast-track emergency approvals for COVID-19 vaccines authorized by Western countries and Japan, which would mean extra doses of the Pfizer, Moderna and Johnson & Johnson shots. According to data, since April 2nd, India has reported the high daily tallies of COVID-19 infections with over 161,000 cases reported on Tuesday.
- Bloomberg is reporting Hong Kong is planning to only allow vaccinated travelers to fly from the city to Singapore once both governments finalize a travel bubble. The plan to open the borders both ways has been in the works since November 2020 but has been constantly met with delays due to ongoing spikes in coronavirus cases. Both Hong Kong and Singapore are key financial hubs in the Asian corridor and are eager to open their borders and economies. Hong Kong’s latest coronavirus outbreak has been contained in recent weeks with numbers either sitting in the low double-digits or fewer.
Covid-19 – Due Diligence And Asset Management
KKR Seeks to Raise $100 Billion by 2022 After Record Year
Brief : KKR & Co. expects to raise more than $100 billion by 2022, building on last year’s record and an abundance of growth opportunities. “We have many more strategies coming to market now than we did at the beginning of 2020,” Scott Nuttall, KKR’s co-president, said Tuesday at the New York-based firm’s virtual investor day. “Our fundraising pipeline is very large.” KKR took in a record $44 billion last year as investors sought higher-yielding assets. The firm, which oversees $252 billion, has been among the most active dealmakers during the Covid-19 pandemic, investing through the downturn to avoid mistakes it made in the aftermath of the 2008 financial crisis. The firm expects to reach its goal by raising $40 billion to $50 billion in private equity, $15 billion to $20 billion in infrastructure, $10 billion to $15 billion in real estate and $20 billion to $25 billion in credit. KKR is either already in the market with or planning to raise capital for more than 20 strategies this year and next, including its flagship Americas and Europe private equity funds as well as its global impact and opportunistic real estate funds, according to the presentation.
Banks to See Big Profits as COVID “Bad” Loans Become “Good”
Brief: The nation’s largest banks are expected to report big profits for the first quarter amid renewed confidence that pandemic-battered consumers and businesses can repay their debts and start borrowing again. The brighter outlook allows banks to move billions of dollars worth of “bad” loans back to the “good” pile, in what are known as loan loss releases. The pandemic forced banks such as JPMorgan Chase and Bank of America to put aside billions of dollars to cover potentially bad loans. The sum of money put into these pools is nothing small. Across the entire banking industry — large and small banks alike — a collective $120 billion is set aside to cover these loans, according to data from the Federal Deposit Insurance Corporation. And a significant chunk of it — around $40 billion — was set aside by the nation’s largest financial institutions. These funds, once released, are added to a bank’s bottom line when they report their quarterly profits. Most banks are expected to report significantly improved results compared to the first quarter of 2020.
EU Governments to Seek Deal on Controversial Covid Passports
Brief: European Union governments will seek to hammer out an agreement Wednesday on technical specifications for so-called coronavirus passports aimed at salvaging the region’s summer tourist season. The “Digital Green Certificates” will offer proof that holders have had a Covid-19 jab or recently returned a negative test, while people who contract the disease should be recognized as immune from day 11 for about six months, according to a draft of the rules due to be discussed at a meeting in Brussels. EU states have been at loggerheads over the passes and the privileges they should convey, and envoys must reach a common position before negotiations with EU lawmakers can begin. The talks come after Johnson & Johnson delayed the European rollout of its vaccine Tuesday pending a review of rare blood clots, dealing a blow to hopes that widespread travel could resume by June. “While the pace of European vaccination has doubled so far in April, compared with that in March, it will have to triple to save part of the summer tourist season and meet the official targets.” Bank of America Corp. strategist Athanasios Vamvakidis said in a note to clients on Tuesday.
Fed is Taking on a Racist Legacy in the Field of Economics
Brief: As the pandemic slammed the Black community and amplified the conversation around racism in America, the economics profession grappled with an uncomfortable truth: that its historical roots and practices today are mired in systemic racial bias. Last summer, the shock of George Floyd’s death and other instances of police brutality ignited a national debate about inequality. Topics like the racial wealth gap became part of everyday discourse. But at the heart of the problem is not just the prosperity separating White Americans from minorities -- often the Black Americans whose ancestors helped build the economy through enslaved labor -- but also that the very discipline that is a key conduit for improvement remains rife with racial bias. “My view of how economics has to inherently address structural racism starts with economics recognizing the role of institutions and power and politics in shaping economic outcomes,” said Joelle Gamble, special assistant to President Joe Biden for economic policy. “We are trying to practice this differently and say ‘how are we actually driving towards economic growth in a way that is helping more and more people who have been permanently left out?’”
Raytheon, Final Sponsor to Sue AllianzGI for an Improved Return Technique
Brief: Raytheon Applied sciences Corp. took authorized motion towards Allianz International Traders, alleging mismanagement of an enhanced return technique, the corporate managed for one of many Waltham, Massachusetts-based firm pension funds. The lawsuit, filed April 9 by the corporate’s Pension Administration and Funding Committee within the U.S. District Court docket in New York, alleges that Allianz International Traders breached its fiduciary duties in managing its Construction Alpha methods, leading to losses in February and March 2020 totaling $ 280 million. for the Raytheon Grasp Pension Belief, in keeping with the court docket report. The losses had been incurred previous to the shut of the merger of Raytheon Co. and United Applied sciences Corp. in April 2020. The pension belief was invested within the Supervisor’s Structured Alpha US Fairness 500 technique. Numeric values in technique names correspond to the quantity of alpha in foundation factors above a corresponding index that the technique is predicted to realize.
Liquidity Will Delay Default Spike for 2-3 Years, Ares CEO says
Brief: Liquidity pumped into the credit markets during the pandemic could stave off a spike in defaults for several years, Ares Management Corp. Chief Executive Officer Michael Arougheti said. “There’s underlying stress that will find its way into the markets but I don’t think that’s anytime soon,” Arougheti said at a virtual Bloomberg News event this week. Default rates are “artificially low” and asset prices are buoyant because “there’s so much liquidity masking that default rate that we’ve all grown accustomed to seeing at this point in the cycle that we’re probably two to three years out before we start seeing a traditional default cycle play out.” Progress against Covid-19 and a strengthening economy are providing support for small businesses, helped by the Federal Reserve’s easy monetary policy and the Biden administration’s focus on growth, according to Arougheti, whose alternative-investment firm oversees about $197 billion in assets. While the forecast is improving, large swaths of the economy including retail, hospitality and travel have a long road to recovery. “The outlook for small business is probably better than I would have predicted as recently as six months ago, but we’re not quite out of the woods yet,” he said.
