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Our briefing for Wednesday March 10, 2021:
Mar 10, 2021 4:05:59 PM
- In a narrow vote of 220-211, the United States House of Representatives passed the Biden administration’s $1.9 trillion coronavirus relief bill on Wednesday. The legislation passed without a single Republican vote, as the GOP argued the job market has recovered enough to warrant little, or no new stimulus spending. President Joe Biden released a statement shortly after the vote celebrating the bill’s passage and plans to make it official when he signs it into law on Friday. “This legislation is about giving the backbone of this nation – the essential workers, the working people who built this country, the people who keep this country going – a fighting chance,” Biden said.
- In Canada, the country’s central bank is keeping its interest rate target on hold at 0.25%, stating economic conditions still require it, even if things are going better than anticipated. In a statement, the Bank of Canada says it expects economic growth in the first quarter of 2021 to be positive, as opposed to forecasts just a few months ago that estimated a contraction to start the year. The statement from the bank also pointed to the new, more transmissible variants of COVID-19 as the biggest risk to an economic bounceback, warning localized outbreaks could “restrain growth and add choppiness to the recovery.”
- A new study, published in the British Medical Journal confirmed that the COVID-19 variant first identified in the United Kingdom, is more deadly than the original strain. The study showed while individuals infected with the UK strain were likely 32% to 104% more likely to die than those who caught the previously circulating variants, the absolute risk of death remained low. There were 227 deaths among the 55,000 people infected with mutant strain of COVID-19, compared with 141 among the same number of cases with earlier strains. The other relative good news is that previous studies have shown that UK approved vaccines from AstraZeneca, Moderna and Pfizer/BioNTech are effective against the variant.
- Reuters is reporting the United Arab Emirates (UAE) and Israel governments have entered formal talks to establish a quarantine-free travel corridor between the two countries. The news comes as the two nations try to boost a bilateral exchange, following a normalisation deal just a few months prior. State news agency WAM reported on Wednesday, the travel corridor will apply to fully vaccinated passengers against COVID-19, which will help facilitate travel for commercial, tourism and official purposes. The UAE and Israel remain among the countries with the world’s fastest COVID-19 vaccination programs.
- The Philippines have reintroduced targeted lockdowns and nighttime curfews as government authorities battle a resurgence in infections. According to the Agence France-Press (AFP), the number of new cases has soared past 3,000 in recent days – twice as many than just two weeks ago and the highest in five months as the more contagious variants of the virus spread. Most of the new cases were in Metro Manila where officials have been quarantining compounds, streets, neighbourhoods and even hotels – anything to limit the clusters and minimize the economic impact on the country.
- Brazil recorded close to 2,000 deaths due to the coronavirus on Tuesday – a new record. Latin America’s largest country is experiencing the perfect storm of year-end carnival gatherings and a new, more contagious variant circulating. The result is a hospital system on the verge of collapse. More than 80% of intensive care beds are occupied in the capitals of 25 of Brazil’s 27 states. The country only has China’s Sinovac and the UK’s AstraZeneca vaccines in circulation, but the Health Ministry announced last week the intention to purchase 100 million doses from Pfizer.
Covid-19 – Due Diligence And Asset Management
The World Isn’t Building Back Better After the Pandemic
Brief : The exuberance of vaccine rollouts in rich countries is masking an ugly reality. Greenhouse gas emissions are already creeping higher than before the pandemic as economies come back to life. That shouldn’t be a total surprise. Even as governments around the world have spent trillions of dollars to aid their nation’s recoveries, only a tiny fraction has gone toward initiatives that would also cut pollution. Many politicians, including U.S. president Joe Biden, have adopted the phrase “build back better.” But they have yet to deliver on the promise. That’s the conclusion of a new report from the University of Oxford and the United Nations Environment Programme (UNEP). Researchers found that, out of the $14.6 trillion in spending announced by the 50 largest economies in 2020, only 2.5% has been for green activities. And that limited stimulus isn’t evenly spread across the globe. “The vast majority of the green spending has been driven by only five countries,” said Brian O’Callaghan, project manager of the economic recovery project at the University of Oxford and a lead author of the report. Much of the initial spending, about $11 trillion, was directed toward rescuing ailing firms, providing loans to small businesses and cash to individuals. Economists mostly agree that was necessary to avoid an even worse outcome. But much of the rest of the stimulus money could have been better spent.
Opportunity from Crisis: How Investors are Playing the Post-Pandemic Property Market
Brief: With its striking facade, Palazzo delle Poste in the heart of Milan is one of the more elegant office spaces in Europe, hosting the likes of JPMorgan and Italy’s first ever Starbucks outlet. Having lain empty for part of 2020 as the COVID-19 pandemic sent office workers home, the early 20th-century building was sold this month to a group of private investors coordinated by Italy’s Mediobanca for 246.7 million euros ($293.3 million), 27 million euros above the original asking price. The 2.8% capitalisation rate - the return the property is expected to generate - was a record for office real estate in Milan. Following a year in which remote working and social distancing have become well entrenched, leaving city-centre offices, retail and hospitality venues deserted, the richness of the deal may seem counterintuitive. But market participants say it illustrates a confidence among investors that the top end of office real estate will withstand the coronavirus shock - even as questions hang over the viability of shabbier and less well-located spaces.
Money Managers Restart London Office Moves After Pandemic Pause
Brief: Companies are reviving plans to move offices in London, in a sign that some executives believe in a return to city centers after the coronavirus pandemic. AllianceBernstein Holding LP is close to signing a lease on new space in the U.K. capital after pausing work on a move last year, people with knowledge of the deal said. The New York-based asset manager is in discussions to rent over 50,000 square feet at 60 London Wall, the people said, asking not to be identified as the plans are private. The company originally entered negotiations on the space before the coronavirus hit, but suspended talks to reassess its office needs, the people said. A spokeswoman for AllianceBernstein declined to comment. Asset manager Mondrian Investment Partners Ltd. is also moving ahead with previously shelved plans to rent space in the same building, two other people familiar with the matter said. It is in discussions to rent about 25,000 square feet in the new development, they added. Neither lease has been signed and there’s still a chance that the deals could fall apart. A spokeswoman for Salle Investment Management, whose clients own the building, declined to comment. A spokesman for Mondrian declined to comment.
Legal & General CEO Wary of Uneven Economic Recovery
Brief: The world is likely to emerge from the coronavirus crisis in an uneven K-shaped recovery that could leave some parts of the economy behind, Legal & General’s CEO said on Wednesday as the British insurer reported a dip in full-year profit. A K-shaped scenario is one in which some sectors, such as manufacturing, bounce back sharply while others, such as tourism, continue to struggle. “The thing that worries us is the K-shaped recovery,” L&G Chief Executive Nigel Wilson told Reuters. “We do need to make sure that levelling up does not mean levelling up for the few.” The life insurer and asset manager, which invests directly in companies as well as investment markets, aims to counter such a scenario with investments including a regeneration project in the northern city of Sheffield, Wilson said.
Hedge Funds Now Front-Runners to Boost Investor Returns This Year, says Credit Suisse Survey
Brief: A majority of investors now believe hedge funds are best placed to enhance the performance of a traditional 60/40 equities and bonds portfolio, with the prevailing rate environment driving a “sense of urgency” among allocators to tap into new sources of returns, a new Credit Suisse survey has found. The bank’s 2021 Hedge Fund Investor Survey, titled ‘A New Dawn’, quizzed more than 200 institutional investors, collectively representing USD800 of hedge fund investments globally. Survey participants – which included pensions, endowments, foundations, consultants, private banks, family offices, and funds of hedge funds – were probed on strategy preferences, allocation plans, and growth and return forecasts, among other things. The annual study found that more than two-thirds – 70 per cent – of investors plan to amend their portfolios this year due to the lower bond yield environment. Hedge funds are the most favoured asset class to bolster the current 60/40 equities/bond mix and plug the funding gap, followed by high-yield credit, equities, and private credit.
Wall Street A-Listers Fled to Florida. Many are Eyeing a Return.
Brief: The “Upper East Side” cocktail at Sant Ambroeus is just the same as in Manhattan, the carpaccio at Cipriani as meaty red as on Wall Street. Here is the private-equity billionaire Stephen Schwarzman, on his way to La Goulue, the clubby French bistro popular with Park Avenue socialites. There is David Solomon, the Goldman Sachs Group Inc. chief, a team of financiers in tow. The names and the money say New York, but the aquamarine pools, the swaying palms and the sultry Atlantic breezes say something else: Florida, the would-be Wall Street South. For months now, A-listers and lesser-lights from the world of high finance have been traveling to the Sunshine State while riding out Covid-19. Hopeful locals see evidence that the area’s long-elusive dream of luring Big Finance for good might be coming true at last. Along Worth Avenue in Palm Beach, real estate agents count commissions from a pandemic-induced real estate boom. Private schools fantasize about attracting the Spence set. The reality is more nuanced -- much more. Only a small percentage of Manhattanites moved permanently to Florida last year. And as vaccinations stir fresh hope that the pandemic’s end is near, ebullient talk of South Florida drawing Wall Streeters en masse is already beginning to fizzle.
