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Our briefing for Wednesday April 14, 2021:
Apr 14, 2021 3:04:33 PM
- In the United States, the Treasury department has formed an office to oversee many of the pandemic-relief programs funded by Congress over the past 13 months. The Office of Recovery Programs will be charged with money appropriation under the American Rescue Plan, Cares Act and other legislation by Washington lawmakers, so that it is reaching the intended targets. The new office will be run by Jacob Leibenluft, an adviser to Treasury Secretary Janet Yellen. Elsewhere in the country, senior government officials are dealing with the fallout from the CDC and FDA’s recommendation on Tuesday of pausing the Johnson & Johnson COVID-19 vaccine due to blood clotting concerns. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases said on Wednesday the pause is indeed just that – a pause – not a cancellation – and he doubts it will extend for weeks to months.
- In Canada, the province of Ontario was hit with a double dose of bad news on Wednesday. The province’s health authority reported more than 4,100 new cases and 28 deaths due to COVID-19 and two clinics in a Toronto suburb had to cancel 10,000 vaccine appointments from Wednesday through Monday April 19th due to a lack of supply. Elsewhere in the country, the reformation of Canada’s Atlantic travel bubble has been put on hold. Originally scheduled to resume April 19th, the premiers of New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador agreed to postpone the free travel between all four provinces until May 3rd at the earliest due to COVID-19 variants concern.
- England’s care home staff could be forced to obtain a COVID-19 vaccine, according to the government. The Department of Health and Social Care has launched a five-week consultation to determine making vaccination a condition of employment for home care staff, with a decision expected in the summer. According to the Scientific Advisory Group for Emergencies (Sage), 80% of staff and 90% of residents need to be vaccinated to provide a minimum level of protection against COVID-19 outbreaks. The latest vaccination numbers show that 78.9% of older adult care home staff have had a COVID-19 inoculation.
- Denmark was the first country to postpone the use of the AstraZeneca COVID-19 vaccine due to rare blood clot cases. On Wednesday, they became the first country in the world to stop using the vaccine altogether. In a statement, Denmark’s health agency head, Soren Brostrom said the results of investigations into the blood clots “showed real and serious side effects.” Denmark’s decision to drop the AstraZeneca COVID-19 inoculation from its vaccination rotation means the country plans to wrap up its vaccination programme sometime in early August, as opposed to July 25th. About 15.3% of Denmark’s 5.8 million population have received the AstraZeneca vaccine as their first dose.
- Israel announced it will open its borders to international travelers as of May 23rd under a phased approach. Israel has been closed to tourism for over a year since the start of the pandemic. While full details are expected to be released next week, Israeli media is reporting travellers will need to be fully vaccinated and the first phase will start with tour groups as they will be easier to monitor. If all goes well, individual travellers will be welcomed in a later phase, but that is not expected to happen until likely, July. Visitors will be required to undergo a PCR test before boarding their flights and upon arrival, undergo a serological test to prove their vaccination.
- In Brazil, scientists are becoming increasingly more worried about the P1 coronavirus variant circulating in the country. A recent study is showing the P1 variant is mutating in ways that could make it more able to evade antibodies and thus, make the virus more resistant to vaccines. Felipe Naveca, one of the authors of the study, said the changes appear to be similar to the South African variant against which studies have shown some vaccines have substantially reduced efficacy. Brazil’s outbreak is also increasingly affecting younger people with data from March showing more than half of all patients in the ICU were aged 40 or younger.
Covid-19 – Due Diligence And Asset Management
Private Equity Landlord Seeking to Evict Renters Despite Ban
Brief :Corporate landlords backed by private-equity firms are seeking to evict thousands of cash-strapped tenants despite a federal moratorium, a group tracking the companies said. Firms controlled by Pretium Partners LLC have sought evictions for unpaid rent against 1,300 residents in seven states, the Private Equity Stakeholder Project, an advocate for industry accountability, said in a report issued Wednesday. Pretium rental companies Progress Residential and Front Yard Residential Corp. moved to oust tenants after the Centers for Disease Control issued a halt to evictions in September, with a disproportionate number of filings in majority Black areas, according to court filings tracked by the non-profit. The companies operate more than 55,000 rental units. “Progress and Front Yard comply with the CDC eviction moratorium and have not evicted any individual who is covered by a valid CDC declaration,” a Pretium spokesperson said in a statement. “We work with our residents and seek to avoid eviction, but if a resident declines to pay rent and will not constructively engage to find a resolution, we reserve the right to proceed in accordance with applicable law.”
EU to Borrow Around 150 Billion Euros Annually for Recovery Fund
Brief: The European Commission plans to borrow around 150 billion euros annually until 2026 to finance the bloc’s unprecedented plan to make its economy greener and more digitalised, making it the biggest debt issuer in euros, the Commission said on Wednesday. The amount of the EU economic plan was agreed at 750 billion euros in 2018 prices, but now totals around 807 billion euros in current prices. The money is split into 338 billion euros in grants and 386 billion in loans for the 27 EU countries and the rest is for joint EU programmes. It will be distributed over the next five years with a third to be spent on reducing CO2 emissions in the EU’s 27 economies. Each of the 27 EU governments can get 13% of its share of the money this year in pre-financing before projects paid for by the scheme reach agreed milestones and targets. If EU governments focus on the grants component of the pre-financing this year, EU borrowing in the third quarter could be around 45 billion euros, Budget Commissioner Johannes Hahn said.
AMF Warns French Firms on Cybersecurity Complacency
Brief: French asset managers have been warned that they could be nurturing a false sense of security over their management of cybersecurity risks. The warning comes from the industry watchdog, the Authorite des Marches Financiers (AMF) following a thematic review. The regulator noted that while cybersecurity practices have improved, there remains a lack of preliminary work on mapping the most sensitive data. Based on the principle that only what is well-known is well protected, the regulator stated that this could “allow significant vulnerabilities to persist in the systems inspected, nurturing a false impression of security”. The AMF is also concerned about insufficient coordination between asset managers and their third party providers. The thematic review involved spot inspections of five asset managers between 2017 and 2020 and included specific analysis of cybersecurity practices during the first phase of the lockdown between March and May 2020.
Wall Street Rises as Big Banks Kick off Earnings Season
Brief: U.S. stock indexes rose on Wednesday after upbeat earnings reports from Goldman Sachs and JPMorgan boosted investor expectations of a strong rebound for corporate America amid swift COVID-19 vaccinations. Goldman Sachs Group Inc rose 3.3% after it reported a massive jump in first-quarter profit, capitalizing on record levels of global dealmaking activity. JPMorgan Chase & Co’s shares fell 1.1% even as the largest U.S. bank’s earnings jumped almost 400% in the first quarter, as it released more than $5 billion in reserves it had set aside to cover coronavirus-driven loan defaults. “It certainly is a solid quarter (for banks) ... often the stocks run up into news and then at least initial reaction is some profit taking and we were seeing that this morning in JPMorgan,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. “I think investors who have invested in the banking sector will feel good about the results and which are likely keep them invested in the sector.”
Airline Investors See a Post-Pandemic Rebound in Low-Cost Travel
Brief: New money is flowing to low-cost airlines in the U.S. as they take on giant carriers racing to recover from the unprecedented collapse in travel during the pandemic. Two established carriers that had already been flying sold shares in the past month, while two new airlines managed to raise more than $100 million each in a little over one year to cover startup costs. All four share a common trait: low operating costs and a customer base seeking affordable flights after more than a year of hunkering down close to home. They’re striking as the domestic leisure business is rapidly returning, even though industry revenue from corporate and international travelers — the domain of bigger carriers — remains depressed. “Low-cost, leisure-focused, domestic-oriented air travel has been in vogue like it’s never been in vogue before,” said Barry Biffle, chief executive officer of Frontier Group Holdings Inc., which held an IPO in March after withdrawing a previous effort to sell stock seven months earlier. The airline industry has never been particularly kind financially, with more than 200 failures or bankruptcies since 1978. But consolidation among the largest players since the 2008 recession set the stage for a comeback. U.S. carriers had $103 billion in net profits from 2010 through 2019, before the pandemic drove $46 billion in losses.
Two Extended Stay Directors Opposed Blackstone, Starwood Deal
Brief: It turns out it’s not just some of Extended Stay America Inc.’s top shareholders who oppose its proposed $6 billion takeover. Two of the company’s own directors are against it as well. Extended Stay disclosed in a regulatory filing late Tuesday that while the majority of the board approved the deal with Blackstone Group Inc. and Starwood Capital Group, Neil Brown and Simon Turner opposed it, saying the $19.50-a-share price was insufficient, and below similar transactions in recent years. They were also concerned about the timing of the deal in light of a recent rebound in hotel stocks, and the potential for further recovery with the U.S. stimulus plan and increasing Covid-19 vaccinations, the filing shows. Turner was of the belief a transaction below $20 a share was inappropriate, and also was concerned about changes to the termination fee that were made in order for the buyers to raise their bid to $19.50 a share from $19.25, according to the filing. Extended Stay has two boards, one for the C-Corp and one for the real estate investment trust. Both Brown and Turner sit on the REIT board, according to the company’s website.
