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Our briefing for Wednesday April 22, 2020:
Apr 22, 2020 4:57:39 PM
- In the United States, a coronavirus model routinely used by government officials warns that no state should reopen until at least May 4th. The model, maintained by the University of Washington, shows Alaska, Hawaii, Montana, North Carolina, Vermont and West Virginia as the only states in line for reopening in early May. The model shows South Carolina, who began reopening this week shouldn’t open until June 5th and Georgia who plans to ease restrictions later this week, shouldn’t open until June 19th.
- Canada’s death toll from the coronavirus exceeded 2,000 on Wednesday while the total cases close in on 40,000. Even though these are grim numbers, Prime Minister Justin Trudeau noted in his media briefing on Wednesday that the federal government is coordinating with the provinces and territories about plans on reopening, noting some areas are further along than others. However, the decision to reopen the border with the United States is a nationwide matter and any decision made in that regard will be made at the federal level. Last weekend, Prime Minister Trudeau noted the closure of the border with America was extended for another 30 days.
- Both the health secretary and deputy leader of the United Kingdom acknowledged on Wednesday they believe their country has now reached the peak of the coronavirus epidemic. Similar to other countries throughout the world though, the UK is dealing with worsening conditions in long-term care homes. The health secretary also noted even though they believe the peak has been reached, the easing of lockdown restrictions are still not close to happening as several tests need to be reached, including a consistent fall in the daily death rate.
- Spain’s Prime Minister has asked parliament to back an extension of the legal order surrounding the lockdown until May 9th. There will be a slight relaxation of the rules as of this coming Monday, most notably, allowing children accompanied by adults to go for brief walks. Prime Minister Pedro Sanchez was grilled for comments/plans earlier in the week saying children under 14 could only be outside with adults to go to a store or bank.
- Singapore has now become a hot zone for the coronavirus pandemic. Infections have now increased past 10,000 after more than 1,000 new cases on Wednesday. This marks the third straight day the country has seen its daily tally hit 1,000 or more. Singapore’s health ministry says the vast majority of the new cases stem from foreign workers’ dormitories, which have now been locked down and increased virus testing implemented to help curb the spread.
- Australia’s Prime Minister Scott Morrison is seeking worldwide support for an international probe into the origins of the coronavirus pandemic. Last weekend, Australia’s foreign minister expressed concern of China’s transparency was at a very high point. Prime Minister Morrison noted a phone call with US President Donald Trump as a “very constructive discussion”. China has condemned Australia for its push on an international inquiry, stating lawmakers are taking instruction from America, while France and the UK have tried to play peacemaker, trying to make clear now is time to fight the virus, and not for finger pointing.
Covid-19 – Due Diligence And Asset Management
Expedia Shares Fly on Report of Talks to Sell Stake for $1 Billion
Brief: Shares of Expedia Group Inc (EXPE.O) rose 9% on Wednesday after a report that the online travel services company was in advanced talks to sell a stake to private-equity firms Silver Lake Partners and Apollo Global Management Inc (APO.N) for about $1 billion. The talks, which were reported here by the Wall Street Journal on Tuesday, come as companies across sectors look to shore up their finances in a bid to weather the raging coronavirus crisis. Expedia shares have fallen about 47% this year, taking a hard knock from the pandemic as lockdowns in many countries have decimated travel demand. “The biggest overhang on Expedia’s stock over the last month has been fears regarding its liquidity position,” Atlantic Equities analyst James Cordwell. “The news that it may be nearing a deal with Silver Lake and Apollo raises confidence that it will be able to make it through this current crisis relatively unscathed.”
Hedge Funds Suffer Largest Quarterly Withdrawals Since 2009
Brief: Investors pulled a net $33 billion from hedge funds in the first quarter, the most in more than a decade. The total is about 1% of of industry capital, and the largest quarterly outflow since investors yanked about $42 billion in the second quarter of 2009, according to a report Wednesday from Hedge Fund Research Inc. In all of 2019, investors pulled $43.1 billion. Some of the industry’s largest names took a hit in last month’s market tumult, including funds run by Ray Dalio, Michael Hintze and Adam Levinson. The managers suffered losses as the coronavirus crisis brought much of the global economy to a standstill. Still, a slew of firms are welcoming fresh money, hoping to buy the market dip and capitalize on those investors that may be ready to open their wallets to take advantage of the market dislocations.
Private-Equity Firm Sycamore is Trying to Get out of Deal to Take Over Victoria’s Secret
Brief: The private-equity firm Sycamore Partners is looking to back out of its deal to take over Victoria’s Secret fromL Brands, according to a lawsuit filed in a Delaware court on Wednesday. The deal for Victoria’s Secret to be taken private was reached in February, just weeks before thecoronavirus pandemicstarted hammering the U.S. economy and forced the closure of thousands of retailers’ stores. Sycamore said in the filing that L Brands’ decision to close its stores and skip rent payments in April violated the transaction. Sycamore is now seeking the court’s approval to break the deal, according to the filing. Representatives from Sycamore and L Brands were not immediately available to respond to CNBC’s requests for comment.
BlackRock says Sustainability Reports Might Slide During Pandemic
Brief: Top asset manager BlackRock Inc, which has vowed to put more focus on climate issues, said that companies might give a lower priority to sustainability reports as they struggle with the COVID-19 pandemic. In a stewardship document provided by a BlackRock (BLK.N) spokesman late on Tuesday, the firm suggested it would tolerate the change. BlackRock also took a neutral stance on the question of whether companies should continue to pay dividends or buy back shares, and said it expected companies to provide shareholders the chance for “meaningful participation” when they move annual meetings to cyberspace. The details marked some early specifics from the world’s largest asset manager about its expectations for companies dealing with the sudden economic shock stemming from the deadly respiratory virus.
Scaramucci Quashes Reports of Citi Ending Ties with his Fund
Brief: Hedge fundinvestorAnthony Scaramuccion Tuesday refuted reports that Citibank has cut ties with his investment firm. “When they say ‘cut ties,’ the Wall Street Journal actually got that wrong. They issued a ‘sell’ on the fund,” the founder and managing partner of SkyBridge said. The Journal on Saturday published a reportthatCitigroup’s private bank decided to discontinue its relationship with SkyBridge after the company’s flagship fund suffered a loss of more than 20% in March. It cited a person familiar with the matter, who said Citigroup thinks the fund has “too much exposure to credit and mortgage-related securities.”
JPMorgan Chase Plans to Return Employees to Work in Phases
Brief: JPMorgan Chase & Co, the largest U.S. lender, said on Tuesday it was working on a plan to bring thousands of employees who have been working from home for more than five weeks back onsite in stages, according to an internal memo seen by Reuters. JPMorgan is the first big bank to announce steps to return to normal as debate grows over reopening the U.S. economy after the novel coronavirus shuttered businesses across the country and put a record 22 million people out of work. “Two considerations are paramount as we plan for this across the firm: We want to do it at the right time — which may differ by region, country and state — and in a manner that prioritizes your health and safety,” the bank’s Operating Committee said in the memo. Around 180,000 of JPMorgan’s more than 200,000 employees have been working from home, with around 25% of its bank branches closed, in an effort to protect employees from the virus, bank executives said last week.
