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Our briefing for Wednesday June 10, 2020:
Jun 10, 2020 3:32:25 PM
- In the United States, a Bloomberg article is reporting a second wave of the coronavirus emerging as states reopened over the past several weeks. The article points to three out of the four most populous states as examples. Florida has reported 8,553 new coronavirus cases this week, the most of any seven-day period. Texas hospitalizations have increased 6.3%, the highest since the pandemic emerged and the third consecutive daily increase. Finally, California’s hospitalizations are at their highest since May 13th and have risen in nine of the past 10 days.
- In Canada, CBC News is reporting the border closure between the country and United States will be extended beyond the June 21st deadline. Both Canada and the United States agreed to a temporary border closure back in March to non-essential travel, meaning only commercial traffic and essential workers who cross the border for work could freely move back and forth. It is unclear how long the border restrictions would be extended to, but in the previous two agreements, both were extended 30 days.
- In the United Kingdom, a sore spot of testing has been brought to light yet again. The Royal College of Pathologists stated on Wednesday the UK government’s testing regime must be “urgently addressed” if the country wants to effectively battle the pandemic. The college says the government has been too focused on setting a goal for a numerical target for tests, instead of laying out a clear strategy. The Royal College cited some of the problems as slow turnaround for results, a failure to inform patients’ doctors when they test positive for the virus and workforce shortages.
- A European Union (EU) report has warned that China and Russia have spread disinformation during the COVID-19 pandemic in an attempt to undermine democracy and stoke social unrest. In what the EU has dubbed an “infodemic”, officials have called on technology companies to do more and stop the misinformation being spread by the two countries. Both China and Russia have denied any wrongdoings regarding the disinformation campaigns.
- As India has eased its lockdown from the coronavirus, a Bloomberg article noted the worst may be yet to come. The article cites the capital city of Delhi as the city of 16 million is having their hotels and community centers be used as COVID-19 wards, while bodies pile up in hospital morgues and crematoriums. Doctors and public health experts warn the peak of the pandemic may not come for another couple of weeks and by the end of July, infections could increase to 550,000 cases. As of Wednesday, India has just over 280,000 confirmed cases.
- The Philippines announced 740 more coronavirus infections on Wednesday, the highest number of cases since the country’s health department adjusted its reporting on May 29th. The adjustment takes into the account the number of “fresh” cases and those that are part of a validation backlog into the country’s overall daily totals. The Philippines are struggling to report their cases on time with only 47 out of 54 laboratories able to do so.
- An Australian public health official has stated the country is on track to have largely eradicated the coronavirus by July. The country’s largest state – New South Wales said it would resume community sports like netball and cricket starting July 1st after the state went two weeks with any cases of community transmission. Some Australian states though, including Queensland and Western Australia have kept their borders shut. This has slowed down the possibility of creating a travel bubble with neighbouring New Zealand who earlier this week lifted all restrictions, except international border controls, after declaring themselves free of the coronavirus pandemic for now.
Covid-19 – Due Diligence And Asset Management
OECD Sees Deepest Peace-Time Slump in a Century
Brief: The global economy will suffer the biggest peace-time downturn in a century before it emerges next year from a coronavirus-inflicted recession, the OECD said on Wednesday. Updating its outlook, the Organisation for Economic Cooperation and Development (OECD) forecast the global economy would contract 6.0% this year before bouncing back with 5.2% growth in 2021 - providing the outbreak is kept under control. However, the Paris-based policy forum said an equally possible scenario of a second wave of contagion this year could see the global economy contract 7.6% before growing only 2.8% next year. “By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments,” OECD chief economist Laurence Boone wrote in an introduction to the refreshed outlook. With crisis responses set to shape economic and social prospects for the coming decade, she urged governments not to shy away from debt-financed spending to support low-paid workers and investment.
AllianceBernstein Nashville Office Opening Delayed by Pandemic
Brief: AllianceBernstein Holding LP Chief Executive Officer Seth Bernstein said the opening of the company’s Nashville headquarters has been pushed back to the first or second quarter of 2021 after the coronavirus crisis delayed construction plans. The firm had planned to be moved in by the end of the year until the pandemic hit, Bernstein said Wednesday during a virtual conference. AllianceBernstein had $596 billion in assets under management at the end of May.
Goldman Traders Gain $1 Billion in Commodities Revenue After Oil Slump
Brief: Goldman Sachs Group Inc (GS.N) commodities unit generated more than $1 billion in revenue this year through May as traders positioned their bets for the collapse in oil prices, a source familiar with the group’s finances said on Wednesday.The gains were largely driven by oil trading, the source said, though other commodities, including natural gas, power and precious metals contributed, the source said. Oil prices plunged to their lowest in years in a dramatic selloff at the start of March. U.S. crude futures at one point fell deep into negative territory as panicked traders bailed out of positions after realizing many would be forced to take physical delivery of oil without a place to put the barrels.Most of Goldman’s boost came from oil trading overseen by Singapore-based partner Qin Xiao and Anthony Dewell in London, amid the collapse in oil prices, according to Bloomberg News, which first reported the $1 billion figure, citing people with knowledge of the matter.
Gundlach: A ‘Wave’ of Layoffs is Coming for $100,000/Year White-Collar Jobs
Brief: Billionaire bond investor Jeffrey Gundlach, the CEO of $135 billion DoubleLine Capital, sees the potential for a "wave of more higher-end unemployment' hitting white-collar workers making more than $100,000 per year as employers increasingly question the value these employees bring. In 11 weeks, more than 42 million Americans filed for unemployment insurance as the COVID-19 pandemic wrecked the economy. The bulk of these job losses hit lower-income households the hardest. "A lot of times it's not the earthquake, it's the fire," Gundlach said on a webcast for the DoubleLine Total Return Bond Fund (DBLTX), later adding that he could "easily see layoffs in various industries" affecting higher earners. Gundlach, who runs the Los Angeles-based bond investment firm, explained that one of the outcomes of remote work is it reveals who produces and who doesn't. "What people may have learned for white-collar services jobs, in particular, during the work-from-home lockdown situation, at least in my perspective — I've talked to a lot of my peers on this — I kind of learned who was really doing the work and who was not really doing as much work as it looked like on paper that they might have been doing," Gundlach said. He's witnessed this at DoubleLine, where people running "certain groups" haven't been as responsive, while the more junior members on their team have stepped up.
Covid-19 and the Future of Sustainability
Brief: As lockdown eases in some countries but not in others, and as the death toll continues to rise, there may be a light at the end of this long, dark tunnel of uncertainty – as long as the world does not backtrack, back to business as usual, nor falter on the promised path toward a sustainable future. For Jamie Jenkins, co-head of the responsible global equities team at BMO Global Asset Management, it’s going to be very difficult to return to how things were before the pandemic rattled markets worldwide. “The particular nature of this current crisis, or recessionary period we’re about to go into, is different. Every time you get a drawdown in markets, every time you get some kind of shock, it tends to be different,” he says. “And what’s different about this one, from the financial crisis in ‘08/09, is that first and foremost it’s a public health crisis that is leading into a consumer crisis because of this unparalleled period of government-mandated lockdown. And so it’s a health crisis, it’s a consumption crisis, and by extension, it becomes a financial concern because of the stress on consumer income.”
In the Age of Coronavirus, Activist Shareholders are Going After Company Bosses
Brief: Activist shareholdershave increasingly focused on ousting top bosses since the coronavirus pandemic took hold of the global economy, according to a new report from investment bank Lazard. In the second quarter, so far, 50% of all campaigns by shareholder activists have involved attacks against boards or management teams, compared to a consistent 33% in the first quarter of 2020 and the whole of 2019. The removal or replacement of top executives at European companies has become a more prominent demand since the onset of the coronavirus pandemic, according to the report. Lazard Head of European Shareholder Advisory, Rich Thomas, told CNBC’s “Squawk Box Europe” on Tuesday that leadership is “never more important” for activist investors than in times of crisis. “That is why we are seeing leadership of companies firmly in the crosshairs of many activists and activist campaigns,” Thomas explained, adding that the coronavirus crisis has taken away some of the traditional tools available to shareholder activists.
