Brief : Discover what’s driving the global economy and what it means for policy makers, businesses, investors and you with The New Economy Daily. Sign up here Federal Reserve officials strengthened their assessment of the economy on Wednesday and signaled that risks have diminished while leaving their key interest rate near zero and maintaining a $120 billion monthly pace of asset purchases. “Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened,” the Federal Open Market Committee said in a statement following the conclusion of its two-day policy meeting. “The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors.” Marking a clear improvement since the pandemic took hold more than a year ago, the Fed said that “risks to the economic outlook remain,” softening previous language that referred to the virus posing “considerable risks.” The statement also noted that sectors hit hardest by the Covid-19 pandemic had “shown improvement.”
Brief: China's private equity investors benefited from the country's swift action to contain the Covid-19 pandemic, enjoying a jump in investment value and deal numbers last year, according to global consultancy Bain & Co. But the fund managers face an uphill battle to conclude more lucrative deals this year amid escalating competition. "Higher selling prices of targeted firms are expected this year," said Lucia Li, a partner with Bain said. "High-growth companies are actively chased by many funds, hence they are raising their valuations and prices." Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. In 2020, private equity funds in China sealed deals worth US$97 billion, up 40 per cent from a year earlier, Bain's survey found. The total number of transactions climbed 53 per cent to 857. Companies in the technology, media, telecoms and health care sectors with both solid earnings and high growth potential were the primary targets of the cash-rich investors.
Brief: Bonds backed by America’s airports are rallying back as the Covid vaccine rollout promises to revive the travel industry, marking a rebound for one of the corners of the municipal-debt market hardest hit by the pandemic. The rally has driven the yields on debt backed by airports down to about 1.2%, or about 30 basis points more than the market’s benchmark, according to an ICE Bank of America index tracking the sector. That marks a dramatic shift from early in the pandemic, when speculation about the deep financial toll of the nation’s shutdowns drove the index’s yield to more than 4% as investors dumped the securities in droves. The move eliminates what had been some of the rare bargains in the municipal securities market as valuations on top-rated bonds hover near record highs. Junk bonds have climbed, too, pushing the yields back toward the more than two-decade low hit before Covid-19 raced through the U.S. “During the pandemic, airlines and anything associated got absolutely crushed in terms of spread -- and they stayed wider for a longer period of time than some of the other sectors that were affected,” said Jason Appleson, a portfolio manager at PT Asset Management in Chicago. “In terms of buying opportunity, I’m not sure there is a lot left.”
Brief: After a number of false starts over the past year, corporate America is finally bringing workers back to the office. The widening availability of vaccines means that employers are setting plans for returns. Exxon Mobil Corp. said on Tuesday that its Houston-area workers would be back full-time in May. JPMorgan Chase & Co., meanwhile, is opening its U.S. offices next month, with its full staff expected back in July on a rotating basis. Already, offices are slowly starting to fill up across the country as social distancing-rules ease and vaccines accelerate, bringing optimism that more Americans will soon be able to resume their pre-pandemic daily life. About 26% of office workers in major cities were back at their desks as of April 21, the highest share in about five months, data from security company Kastle Systems show. Companies that postponed searches for space last year are back in market, looking to take advantage of cheaper rents and concessions from landlords eager to fill vacancies. National demand for offices jumped 28% in March from the prior month and is now just 9% below pre-pandemic levels, according to property-data firm VTS, which tracks office tours. “People are feeling really good about where we are in the world from the economy and getting Covid under control,” said Ryan Masiello, chief strategy officer at VTS. “That’s a big part of what’s driving people back into the market.”
Brief: In March, the billionaire founder of Austin, Texas’ ESW Capital, Joe Liemandt, fired off a directive to managers of his army of 2,500 remote workers. The email’s subject line read: “White Collar Specialization- Worksmart Work Unit.” With the world embracing remote work as the new normal, Liemandt ordered his managers to design work units, specialized tasks that workers—mostly software engineers— could perform efficiently over and over, as if they were assembly line workers in an old-fashioned auto factory. “Most jobs are poorly thought out and poorly designed—a mishmash of skills and activities . . . poor job designs are also quickly exposed with a move to remote work,” Liemandt wrote. The solution, Liemandt argued in his email, was for managers to observe remote workers and identify repeatable work patterns in order to create these work units. The idea was for managers to fragment white-collar work into small-scale tasks—the writing of specific code by a software engineer, a customer support agent solving a specific technical problem, or a targeted document analysis. Liemandt wanted his managers to create these units—lots of them.
Brief: Amid the market volatility and economic uncertainty of the pandemic, compensation for professionals in private equity and venture capital continued to rise. In Benchmark Compensation’s annual survey of industry professionals, 68 percent of respondents said they earned between $150,000 and $1 million last year, marking the highest percentage to report earning more than $150,000 since the company began publishing the annual report 14 years ago, the firm said in a press release Tuesday. The 2021 report also marks the seventh consecutive year of gains in private equity and venture capital compensation. Overall, the study found that respondents working in private equity earned more money than those working in venture capital, but respondents working in hybrid firms earned the highest levels of compensation as vice presidents and managing directors. The report was based on a survey of hundreds of workers, from partners to junior advisors, from October to November 2020. Participating firms included Goldman Sachs, KKR, Bain Capital, and BlackRock. “Overall, compensation is up, but more than half of those surveyed are dissatisfied with their pay,” David Kochanek, the publisher of the study, said in a statement. According to Benchmark Compensation, employees cited market conditions and employee expectations as the reasons why they were dissatisfied.