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Our briefing for Wednesday March 17, 2021:
Mar 17, 2021 3:47:42 PM
- In the United States, Bloomberg is reporting Americans are sitting on a stockpile of savings that rivals the price tag of the latest COVID-19 relief package. According to the report, those who were lucky enough to have disposable income saved during the pandemic and nowhere to spend it, have approximately $1.7 trillion saved through January. That number is expected to rise, bolstered by the latest round of new stimulus payments. Economists at Wells Fargo and & Co. are predicting as the economy reopens, consumer spending over the next two quarters is likely to be the strongest such period in at least 70 years.
- In Canada, former Bank of Canada Governor, Mark Carney weighed in on the country’s pandemic preparedness on Wednesday. Carney appeared on a CTV News morning show and said Canada needs to build up its manufacturing capacity for both vaccines and personal protective equipment (PPE). “We, like many other countries, thought we could buy our PPE from abroad, ultimately buy vaccines from abroad in a timely way. That just hasn’t been the case for either and we’re suffering as a consequence. We need to think about all the essential items on which we can’t rely on international markets for,” said Carney. The former Canadian banking head was hired last year by Brookfield and serves as their Vice Chair and Head of ESG and Impact Fund Investing.
- The United Kingdom’s Department of Health and Social Care (DHSC) said on Wednesday that nearly half of all adults across the country have now received at least their first inoculation of a COVID-19 vaccine. The latest data shows between December 8th and March 16th, over 25 million have received their first dose of the Pfizer and Oxford/AstraZeneca vaccines, while close to 1.76 million are fully vaccinated. Prime Minister Boris Johnson weighed in upon hearing the numbers, calling them an “incredible achievement” and hailing the milestone as “25 million reasons to be confident for the future”, as the government prepares to ease restrictions.
- The European Union (EU) is flexing its muscles and turning its glare towards the UK, threatening to ban exports of COVID-19 vaccines to the country to safeguard doses for its own members that are dealing with a third wave of the coronavirus pandemic. EU Commission Head Ursula von der Leyen called the current situation, “the crisis of the century” and the need to accelerate vaccination rates. Von der Leyen said the flow of vaccine exports from the United States was fine but criticized Britain over their lack of deliveries of the AstraZeneca vaccine. Ironically enough, many EU bloc nations have suspended their AstraZeneca shots on their citizens, citing pending safety checks.
- Bloomberg is reporting vaccine nationalism is likely going to derail the efforts of the World Health Organization’s (WHO) Covax initiative. The governing health body was wanting to deliver 2 billion doses of vaccines to poorer and middle-income nations by the end of the year, but Adar Poonawalla, CEO of the Serum Institute of India, the world’s largest vaccine maker, says this is unlikely to happen. Appearing on Bloomberg Live, Poonawalla blamed wealthier nations like the United States, and larger nations like India stockpiling doses for their own citizens first. Poonawalla went on to add it will likely take two or three more months for Covax shipments to really pick up, which means hitting the 2 billion benchmark likely won’t happen until sometime in 2022.
- China is resuming visa processing for foreigners from dozens of countries, but there is a catch: they must have been inoculated against COVID-19 with a Chinese-made vaccine. The announcements made by Chinese embassies in 20 countries, including the United States, India and Australia, vary slightly for each country, but pledge a return to pre-pandemic visa processing for some groups to resume “people-to-people exchanges in an orderly manner.” The move has raised eyebrows about the motivations behind China’s demand as their vaccines have not been approved in many of the countries to which it has opened travel and they will not accept foreign vaccines made elsewhere, including those approved by the WHO.
Covid-19 – Due Diligence And Asset Management
Some UK Financial Firms Blame COVID for Missing Target of Women in Senior Roles
Brief : Most financial firms and institutions signed up to a UK finance ministry backed charter met their 2020 targets for women in senior management as those who fell behind blamed hiring freezes due to COVID-19, a review said on Wednesday. The fourth annual review from think tank New Financial for Britain’s finance ministry, said the Women in Finance Charter faced its biggest test yet after the COVID-19 pandemic struck in 2020. Over 70& of the 209 signatories, including the finance ministry, have met their self-imposed targets, or were on track to meet future targets, the review said. Just over 60% of the signatories have set a target of at least 33% of female representation in senior management. A group of 81 firms were due to hit their target by the end of 2020, but 44 of them failed to do so, citing deliberately ambitious targets, and recruitment or promotion freezes due to COVID, the review said.
At Long Last, Wall Street sees Path to Return to the Office
Brief: New York City is reopening, vaccinations are accelerating and spring brings with it an air of optimism. For Wall Street’s banks, that means a return to offices may finally be in sight. At JPMorgan Chase & Co., hundreds of interns are set to work in the lender’s New York and London offices in the coming months. Citigroup Inc. is providing workers with rapid COVID tests as it sketches out its plans to safely return people to its buildings. Goldman Sachs Group Inc. has said it hopes to have more employees back by summer. One year after Wall Street sent employees home in droves to stop the spread of the coronavirus, the prospects of a broad return are starting to get clearer -- and not a moment too soon for some companies in the industry. From Zoom fatigue to the exhaustion of jobs colliding with home life, many bankers say the strains of long-term remote work are growing for bosses and underlings alike. There are exceptions, and signs of growing flexibility as companies such as Apollo Global Management Inc. consider hybrid models. But as other industries look at dramatically reshaping work in a post-COVID world, the stance of New York’s financial giants is clear: Employees should be at offices. It’s just a matter of how quickly -- and safely -- their leaders can get them there.
U.S. Travel Spending Sank 42% in 2020 Due to the Pandemic
Brief: Travel spending by Americans plunged by 42%, or $492 billion, in 2020, according to a report by an industry group, amid social, travel and business restrictions aimed at curbing the spread of COVID-19. The U.S. Travel Association said the industry shed 5.6 million direct and indirect jobs last year, and the decline in travel dragged down total economic output to $1.5 trillion, from 2019’s $2.6 trillion. U.S. tax revenue collected from travel plummeted by $57 billion in 2020. “While the gradual progress of vaccinations has provided hope that a turnaround may be on the horizon, it is still unclear when travel demand will be able to fully rebound on its own,” said U.S. Travel Association President and CEO Roger Dow. As millions of Americans get vaccinated and travel destinations begin to reopen, the industry is optimistic that demand will return this spring. Disney said Wednesday its California theme parks will reopen April 30.
This Is the ‘Biggest Risk of All’ for Investors, According to Howard Marks
Brief: Consumers have $1.8 trillion in extra cash to spend. That increase in disposable income since the beginning of the pandemic — combined with the Federal Reserve’s promise to keep interest rates low — is why Howard Marks, co-founder of Oaktree Capital Management, is feeling pretty optimistic about the economy. “A related positive to consider is that market tops usually occur with the economy several years into the up-leg of the cycle and vulnerable to recession,” Marks wrote in a new investor letter. “This time, however, we have strong markets at the beginning of what may prove to be a long economic recovery.” In this latest memo, Marks focused on how the markets behaved in 2020 and what investors should do this year. This included addressing the disappointingly brief window in 2020 to buy assets at huge discounts, investors’ fears of missing out, and re-energized buying after the initial market downturn in March. All that led to the market hitting new highs later in the year, he said.
Suspended Property Funds Collect £40m in Management Fees over 2020
Brief: Investors trapped in suspended open-ended property funds have paid out more than £40m in management fees over the course of 2020, with some still paying fees in 2021 as £2.8bn of investor capital remains locked away across three funds. According to Investment Week calculations utilising fee and fund size data from Morningstar Direct and share class classifications from FE fundinfo, investors have shelled out approximately £40m in management fees across nine suspended property funds over the course of 2020, with the total figure likely larger than this, as data for St James's Place, Aviva Investors and Canlife's property funds were unavailable. The costs calculated only apply to the management fees of the fund, with various other fees such as property, transaction and dealing costs that comprise the total ongoing charge not included. From Morningstar Direct, the fees were taken from the firm's MiFID files and total fund size was based on "surveyed figures obtained from the firm" on a month-to-month basis. Main share classes have been selected according to the methodology employed by FE fundinfo.
HSBC Closes Main Hong Kong Office After Multiple Covid Cases
Brief: HSBC Holdings Plc’s main Hong Kong office was closed until further notice after three people working in the building tested positive for COVID-19 amid a renewed wave of infections among the city’s business and expatriate community. The Center for Health Protection has published a formal notice requiring visitors who stayed at the building for more than two hours between March 3 and 16 to undergo a mandatory test at a government-approved center by March 19, according to an internal memo. The move means staff and customers will have no access to the lender’s biggest branch in the city. “It is our understanding that HMB can return to normal business when virus testing of colleagues and deep cleaning of the facility are complete,” HSBC wrote in the memo distributed on Wednesday. “The exact timing is yet to be confirmed.” In a statement, a spokeswoman for HSBC said the bank is following the guidelines from the authorities and taking all necessary measures to reopen as soon as practicable. “For banking services, we have well-developed contingency measures that ensure our services and critical processes continue to be maintained,” she said.
