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Our briefing for Tuesday February 9, 2021:
Feb 9, 2021 3:15:54 PM
- In the United States, a report from the Conference Board says close to half of employers expect their employees to be able to return to the office as early as this spring. In the report, roughly 40% of employers that shifted their staff to remote work are planning to have a return to the office as early as March. However, this may be easier said than done as the new normal has made remote work at least a future consideration. Many companies may make the return voluntary or adopt some sort of flexible work schedule. According to a separate survey by the Pew Research Center, more than half of employees said if given the option, they would want to keep working from home, even after the pandemic.
- During his routine news briefing Tuesday, Canadian Prime Minister Justin Trudeau said non-essential travellers arriving at the country’s land border will have to provide proof of a negative COVID-19 test, similar to air travelers. "As of February 15th, when you return to Canada through a land border, you’ll need to show a 72-hour PCR test, just like air travel,” said Prime Minister Trudeau. Canada’s Chief Public Health Officer Dr. Theresa Tam said last week there is no exemption to Canadians who have already received a vaccination – for instance – snowbirds who stay in Florida or Arizona during the winter months. Prime Minister Trudeau went on to add while border officers can’t legally deny entry to Canadians returning, those who show up without proof of a test could face fines up to $3,000 CDN.
- The United Kingdom, similar to Canada, are stepping up their restrictions and quarantine rules for returning travellers. Starting next week, the UK will require passengers where worrying coronavirus variants are spreading to pay for 10 days of quarantine in a hotel, while rule breakers will face heavy fines (up to $14,000 USD) or jail terms. The restrictions are added to those already in place, which ban travel abroad for holidays. UK Health Secretary Matt Hancock told parliament Tuesday, “anyone who lies on the passenger locator form and tries to conceal that they’ve been in a country on the “red list” in the 10 days before arrival here, will face a prison sentence of up to 10 years.” The 10-day hotel stay will also cost the traveler $2,400 USD and further COVID-19 tests will be conducted on day 2 and day 8 of their quarantines. Upon the news, airlines and travel companies called for more government aid, saying the new rules would deepen a crisis that has seen them lose nearly all of their revenue.
- Bloomberg is reporting German Chancellor Angela Merkel wants a gradual reopening of stores and hotels next month as long as the infection rates continue to fall. According to a chancellery briefing seen by Bloomberg, Chancellor Merkel will propose to Germany’s 16 state leaders on Wednesday the gradual reopening plan while asking the current restrictions – which include the closures of schools and non-essential stores to remain in place until early March. Stores would reopen in regions with a seven-day COVID-19 rate of less than 35 per 100,000 and hotels in areas where the rate is less than 20. For Germany, as a whole the number currently is just over 70 per 100,000.
- In Russia, new data suggests the country’s coronavirus death toll in 2020 was likely close to three times higher than reported. Figures released from Russia’s federal statistics agency on Monday indicated there was as many as 162,429 deaths due to COVID-19. Russia officially reported 57,555 deaths from COVID-19 in 2020, according to data from the country’s coronavirus task force. Based on those new numbers, Russia would have ranked third in the world for COVID-19 related deaths.
- The World Health Organization (WHO) led team probing the origins of COVID-19 in China over the last several weeks have said the coronavirus may have taken a “convoluted” path to Wuhan, but bats remain the likely source of transmission. Peter Ben Embarek, who led the team of independent experts, said the work had uncovered new information, but not dramatically changed their picture of the outbreak. The WHO-led team said the transmission of the virus via frozen food is a possibility that warrants further investigation but ruled out the lab leak as suggested by the United States. According to an American State Department spokesperson, the “jury’s still out” on whether China has been fully transparent on the coronavirus pandemic and they are looking forward to seeing the complete report and would make an assessment based on science and data.
Covid-19 – Due Diligence And Asset Management
KKR Deployed Record $12.5 Billion as Firm Ramped Up Deals
Brief : KKR & Co. deployed a record $12.5 billion in the fourth quarter, finding buying opportunities in the market turbulence of the Covid-19 pandemic. New York-based KKR also had a record fundraising for the year, taking in about $44 billion, according to a statement Monday. KKR “had the most active fundraising and deployment year in our history,” co-Chief Executive Officers Henry Kravis and George Roberts said in the statement. Private equity firms have been bringing in cash at a rapid pace and KKR has been among the most active dealmakers. Notable acquisitions last year included a $3 billion-plus deal for lens retailer 1-800 Contacts and spending 4.2 billion pounds ($5.8 billion) for waste management business Viridor Ltd. It has also expanded its U.S. industrial real estate holdings. Its $2.8 billion Dislocation Opportunities Fund, raised at the height of pandemic anxiety, gained 52% last year as it seized on credit opportunities.
Biden to Discuss Relief Package with CEOs at Walmart, JPMorgan, Others
Brief: U.S. President Joe Biden will meet with the chief executives of JPMorgan Chase, Walmart, Gap Inc, and Lowe’s Companies on Tuesday as part of his efforts to boost an economy still reeling from the coronavirus pandemic. Biden and the executives, who will be joined by Vice President Kamala Harris and Treasury Secretary Janet Yellen for the 1:45 p.m. EST gathering in the Oval Office, will discuss Biden’s $1.9 trillion coronavirus recovery package, known as the American Rescue Plan, the White House said. JPMorgan’s Jamie Dimon, Walmart’s Doug McMillon, Gap’s Sonia Syngal and Lowe’s Companies’ Marvin Ellison were all slated to attend along with Tom Donohue, the head of the U.S. Chamber of Commerce, a top business lobby. Speaking at a briefing with reporters ahead of the meeting on Tuesday, White House press secretary Jen Psaki said the goal was to hear thoughts on the plan from some of the nation’s top employers, though she expected it to be the first of many meetings with the business community. “It’s more of a discussion about the country and the economic downturn that we’ve gone through,” Psaki said. “The president wants to lay out all of the specifics of his plan, hear feedback from them as he has with many different groups over the past couple of weeks,” she added.
Retail Investors Cut Spending and Increase Investment
Brief: Individual investors have reduced spending and increased their investments during the Covid-19 pandemic, research indicates. A survey of 2,000 investors in the UK showed that 4 in 10 – or 39% - had “dramatically” cut spending and were funding investments. ITI Capital, a broker that sponsored the research, said low interest rates were the cause and that 35% of investors would invest more if bank rates were cut further. Investors favoured traditional investment asset classes, although 24% were exploring cryptocurrency as an alternative investment as it had “not been negatively impacted by Covid-19”. Just over a quarter said they were more willing to try new investment products and take more risks over the next 12 months. Meanwhile, 40% of investors said they anticipated a bull run in 2021 if the Covid-19 situation dramatically improved, but 35% expected a house price crash worse than the 2008 crash to occur this year. Despite the appearance of piles of cash created by reduced spending, 36% of investors said they had dipped into their savings to stay afloat during the Covid-19 crisis.
Public Pension Plans Market USD154.6bn in Private Markets in 2020, but Appetite for Real Estate and Real Assets Plummets
Brief: Public pension plans tracked by investment data and analytics firm eVestment reported USD154.6 billion of commitments to private markets funds in 2020. This is a 2 per cent increase from 2019’s totals. In a pandemic-impacted year that turned fund due diligence and the normal course of business on its head, 2020’s results clearly show how the investment business was able to pivot to virtual due diligence to eke out an increase in commitments compared to 2019. There were clear winners and losers across the asset classes tracked however, with both private equity and private debt having strong years while real estate and real assets saw significant declines in reported commitment totals. Across all private fund commitments eVestment tracks, pension giant CalPERS was the biggest allocator of capital to private markets, with USD19.94 billion of commitments reported. CVC Capital Partners’ funds were the top destination for public plan money, raising USD5.2 billion from the public pensions eVestment tracks. Private equity was a big winner in 2020, according to eVestment’s year-end data. Reported commitments to private equity funds grew 20 per cent year-over-year to USD83.1 billion. The 2020 total of 1,047 individual commitments represented a 9 per cent increase from 2019’s total number of commitments and the average commitment size in 2020 was USD79 million compared to USD72 million in 2019.
Remote Working High on List of Traders’ Challenges, Boosts E-Trading: JPMorgan
Brief: Remote working is now one of the top daily challenges facing traders and a development that will likely boost the use of technology and electronic trading in the months ahead, a survey by JPMorgan released on Tuesday showed. According to the survey of 260 fixed income, currencies and commodities (FICC) traders conducted in December, almost a third cited the availability of liquidity -- how quickly and easy it is to buy and sell an asset in markets -- as their chief trading challenge. That was followed by workflow efficiency and remote working, a new addition that highlights the impact of the coronavirus pandemic on trading floors following widespread lockdowns that began almost a year ago. According to the survey, 77% of respondents said they worked from home between March and June for an average of four days a week, with 21% reporting a change in the their execution style. Many cited increased electronic trading. For 2021, 55% of respondents said they expected to work from home for an average of four days a week, with 18% saying their execution style could continue to change going forward -- again mostly through increased electronic trading.
Activist Jeff Ubben to Seek Up to $8 Billion for Impact Fund
Brief: Activist investor Jeff Ubben is seeking to raise as much as $8 billion for a hedge fund at his investment firm Inclusive Capital Partners, according to a person familiar with the matter. The Spring Fund II would be a successor to the $1.5 billion Spring Fund that Ubben started at ValueAct Capital Management, the activist hedge fund he founded in 2000. The new offering would focus on so-called impact investing, which aims to make systemic changes at companies and sectors to the betterment of society, the person said. The fundraising goal was reported earlier Tuesday by Reuters. Ubben launched Inclusive Capital after leaving ValueAct in June. The new firm counts electric-truck company Nikola Corp., power generator AES Corp. and bioenergy firm Enviva Partners among its investments. While at ValueAct, Ubben agitated for changes at high-profile companies including Citigroup Inc., Rolls-Royce Holdings Plc and Microsoft Corp. The fundraising comes as Ubben is in the midst of negotiating for a board seat at Exxon Mobil Corp. He’s also discussing making a sizable investment in the oil giant if he were granted a seat.
