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Our briefing for Tuesday April 7, 2020:
Apr 7, 2020 4:23:39 PM
- United Kingdom Prime Minister Boris Johnson remains ‘stable’ in the intensive care unit of London’s St. Thomas Hospital. Downing Street officials noted the Prime Minister received standard oxygen treatment for his coronavirus symptoms but is not on a ventilator. As England suffered their deadliest day yet, a Financial Times (FT) article notes the daily death toll from coronavirus was almost 80% higher than the hospital figures reported as the disease spread across the country. The FT reported on March 28th that the Department of Health and Social care cited 926 people died in hospitals. However, the latest figures show 1,649 people had died in English hospitals during that same time period; a 78% difference between those two numbers.
- In the United States, the government struck a deal with 3M to import over 166M N95 respirator masks into America from abroad. This deal will allow 3M to continue selling its American-made N95 masks to Latin America and Canada after it was reported last week President Donald Trump was trying to stop 3M from doing so.
- In trying to avoid possible issues like the U.S./3M situation in the future, Canadian Prime Minister Justin Trudeau noted in his Tuesday media briefing of domestically made medical production equipment. Citing global restrictions and spiking demand, Canada will look to build 30,000 ventilators while getting other companies to produce medical gowns and other personal protective equipment. Trudeau didn’t make clear when these materials would be available, such as the 30,000 ventilators, but suggested they could be ready in the weeks and months ahead.
- In Dubai, the region has received its strictest lockdown measures yet as cases tripled in just over a week. Since Sunday, Dubai residents leaving their home for trips deemed “essential” now require a permit issued online by the Dubai police, with a new permit needed for each trip. A mask and gloves must also be worn while outside and these rules will be in effect for at least two weeks, subject to renewal.
- The Australian government have given the green light to the anti-malaria drug touted by United States President Donald Trump. The drugs, hydroxychloroquine and chloroquine will be given to Australian Covid-19 patients in hospitals outside of clinical trials. The drugs are being used throughout the world as a treatment to ease symptoms of coronavirus, but studies on its efficiency have been mixed and limited due to the short-time period.
- In Wuhan China, the city where the outbreak first began, the country’s state media is reporting the city’s 76-day lockdown will be lifted on Wednesday. China reported no new deaths from the coronavirus on Monday, the first time this has happened since late January
Covid-19 – Due Diligence And Asset Management
When Greed and Fear Collide: Wall Street is Already Calling Traders Back to the Office
Brief: On April 2, the day that coronavirus infections around the globe hit 1 million, managers inside JPMorgan Chase & Co. were emailing their latest plans for staffing New York-area trading floors amid the deadly pandemic. One worker on the sales team noticed a colleague wasn’t on the list and asked where he’d be “Corona Town, U.S.A.,” the person wrote back. Then one of the bank’s credit-trading leaders, Nicholas Adragna, weighed in: “The trading desk will be in the office unless they have a medical condition with a dr’s note.” More than 100 employees were on the message chain seen by Bloomberg, and some were horrified. It came soon after an outbreak of COVID-19 inside JPMorgan’s Madison Avenue headquarters, in which at least 16 people tested positive on a single trading floor.
Global Health Fund Calls for $8 Billion to Begin COVID-19 Exit Strategy
Brief: A leading global health fund has asked international businesses and governments to provide $8 billion to support development and production of COVID-19 tests, drugs and vaccines. British-based Wellcome Trust said the initiative, dubbed COVID-Zero, is aimed at the private sector and it is urging chief executives of multinational companies to join the coalition and save lives. An initial $8 billion by the end of April - a fraction of the sums wealthy governments have injected into struggling economies - would be enough to develop new COVID-19 tests, drugs and vaccines and to begin scaling up production, the fund said.
U.S. SEC’s Clayton says Companies Seeking Bailouts Must Disclose Plans, Communicate with Investors
Brief: The head of the U.S. Securities and Exchange Commission (SEC) said on Tuesday that companies in discussions about bailouts resulting from the economic impact of the coronavirus outbreak should disclose to investors where they stand. “We’re in a very different environment,” SEC Chairman Jay Clayton said in an interview on CNBC. “Companies are going to be talking about where they stand ... and their plans going forward is sensitive information. I encourage companies to disclose where they stand and limit speculation ... as we move forward.” Clayton added that companies must communicate with investors about plans for dividends, share buybacks and capital preservation.
‘Pharma Bro’ Wants out of Prison to Research Coronavirus
Brief: Convicted former drug company CEO Martin Shkreli, known as “Pharma Bro,” wants to get out of prison so he can help research a treatment for the coronavirus, his lawyer said Tuesday. Defence attorney Ben Brafman said that he will file court papers asking federal authorities to release Shkreli for three months so he can do laboratory work “under strict supervision. His client — best known before his arrest for drug price-gouging and his snarky online persona — is housed at a low-security prison in Allenwood, Pennsylvania. “I have always said that if focused and left in a lab, Martin could help cure cancer,” Brafman said in a statement. “Maybe he can help the scientific community better understand this terrible virus.” In a research proposal posted online, Shkreli called the pharmaceutical industry’s response to the pandemic “inadequate” and said researchers at every drug company “should be put to work until COVID-19 is no more.”
Scandal Follows Crisis After 35 Bond Funds Shuttered in Sweden
Brief: The liquidity crunch that shuttered 35 bond funds in Sweden last month has revealed some disturbing truths about the country’s credit market. As the spread of Covid-19 across Europe triggered a sell-off in corporate bonds, investors keen to withdraw their savings in Sweden suddenly learned they couldn’t. While the Swedish funds were legally entitled to suspend trading to ensure fair treatment for all their customers -- a process known as gating -- it now seems clear that investors weren’t aware of the risks they faced. The episode has sparked calls for funds to drastically adjust their marketing practices. “It’s reprehensible that some corporate bond funds have marketed themselves as an alternative to savings accounts,” said Frida Bratt, a savings economist at Nordnet Bank AB. But many investors “haven’t realized there’s a whole different risk level involved.”
Coronavirus Had Ackman Consider Liquidating Portfolio
Brief: Activist investor Bill Ackman was so concerned about the potential impact of the coronavirus that he considered liquidating his hedge fund’s entire portfolio for the first time. Instead, the billionaire opted for another strategy: a lucrative credit hedge that earned his firm about $2.6 billion in profits when the market plummeted. Ackman said in a letter to investors in the fund, Pershing Square Capital Management, Monday that he used the proceeds from the credit bet to substantially boost investments in several portfolio companies. That included increasing his stake in Warren Buffett’s Berkshire Hathaway Inc. by 39%, and reinvesting in Starbucks Corp. in a new position valued at roughly $730 million.
