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Our briefing for Wednesday March 3, 2021:
Mar 3, 2021 3:48:59 PM
- The United States’ Centers for Disease Control and Prevention (CDC) is urging Americans not to give into COVID-19 fatigue as the state of Texas plans to lift its mask mandate and end restrictions on businesses. Speaking during the White House COVID-19 Response Team briefing, CDC Director Dr. Rochelle Walensky said, “I think we at the CDC have been very clear that now is not the time to release all restrictions.” Texas Governor Greg Abbott made the announcement of reopening on Tuesday stating businesses of any type will be allowed to open 100% beginning March 10th. The state of Texas approximately has a population of 29 million people and according to statistics from Johns Hopkins University, as of Monday, only 6.57% of Texans have been fully vaccinated. The state of Mississippi is also looking to lift their COVID-19 restrictions.
- In Canada, Prime Minister Justin Trudeau announced the government on Wednesday would extend the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy until June. Speaking at a news briefing, Prime Minister Trudeau said while the Canadian economy has shown encouraging signs of rebounding, and vaccines continue to roll out, support is still needed to get struggling citizens and businesses through at least the spring. The wage subsidy will continue to provide 75% coverage to eligible employers while the rent subsidy will remain at 65%.
- In the United Kingdom, Chancellor Rishi Sunak revealed the government’s budget on Wednesday and pledged another £65 billion to extend emergency support measures for workers and businesses in the wake of the pandemic. Chancellor Sunak also announced Britain will hike taxes on the country’s largest companies as it tries to repair government finances and recover from the worst economic slump in more than three centuries. Starting in 2023, Britain will hike its corporation tax from 19% to 25%, which Chancellor Sunak stated would still be below the level in most major economies. The UK government has borrowed £400 billion during the pandemic, making the total government debt soar to £2 trillion.
- Reuters is reporting a blast struck a coronavirus testing site, north of Amsterdam, Netherlands on Wednesday, shattering windows, but luckily causing no injuries in what police called an intentional attack. The police found a metal cylinder at the scene stating it must have been placed as something like that just doesn’t happen by accident. The Dutch are expected to go to the polls on March 17th and vote in national elections, which will be widely seen as a referendum on the government’s handling of the pandemic. Citizens have become increasingly angry at healthcare authorities in 2021, frustrated by the lockdown measures with Wednesday being the first day in several months where measures were slightly eased.
- Seeing the success of Israel’s COVID-19 vaccine rollout, a couple of European Union bloc members are jumping ship to team with the nation to produce second-generation vaccines against coronavirus variants. Frustrated by the EU’s vaccine rollout, Austrian Chancellor Sebastian Kurz and Danish Prime Minster Mette Frederiksen plan to meet with Israeli Prime Minister Benjamin Netanyahu later in the week on vaccine research and cooperation. According to the EU, almost 33 million doses of vaccine have been given so far, but only 11 million Europeans have been fully vaccinated. Israel, a country of 9.3 million, has immunized over half of its population since late December.
- Japanese Prime Minister Yoshihide Suga said the government will hold an advisory board meeting on Friday to decide on extending the state of emergency in Tokyo beyond the March 7th deadline. Prime Minister Suga is concerned by a shortage of hospital beds in the capital region, along with a slow decline in infections, and is considering a two-week extension of the state of emergency. Speaking to reporters, the prime minister stated, “I think that about two weeks will be necessary, so I would like to make a final decision after hearing the opinions of the experts and people concerned.”
Covid-19 – Due Diligence And Asset Management
US$2.9T Consumer Savings to Power Global Economic Recovery
Brief : Consumers in the world’s largest economies amassed US$2.9 trillion in extra savings during COVID-related lockdowns, a vast cash hoard that creates the potential for a powerful recovery from the pandemic recession. Households in the U.S., China, U.K., Japan and the biggest euro-area nations socked money away when forced by the coronavirus to stay home and out of the shops, according to estimates by Bloomberg Economics. They are likely continuing to do so as restrictions remain and governments dole out stimulus. Half that total — US$1.5 trillion and growing — is in the U.S. alone, the data show. That’s at least double the average annual growth of gross domestic product witnessed in the last expansion and equivalent to the annual output of South Korea. Such savings should provide fuel for economies to rebound once COVID-19 is finally wrestled under control and as vaccines roll out. The optimists are betting on a shopping spree as people return to retailers, restaurants, entertainment venues, tourist hot spots and sports events as well as accelerate those big-ticket purchases they held back on. Those who are less confident wonder if the money will instead be used to cover debts or hoarded until the health crisis passes and labor markets look stronger. In the U.S., a running down of all the money saved in the past year would propel economic growth to as much as 9 per cent rather than the 4.6 per cent currently projected for 2021 GDP, according to BE. By contrast, if the savings go unspent, the economy will likely grow just 2.2 per cent.ompared to Q1. The sector reported 31 attacks between March and May alone.
Apollo to Acquire Retailer Michaels for $3.3 Billion in Cash
Brief: Michaels Cos., the U.S. crafting and hobby retail chain, has agreed to a sale to Apollo Global Management at an equity value of about $3.3 billion. Apollo will pay $22 a share to Michaels shareholders, representing a 22% premium from Tuesday’s close. The Michaels board has unanimously approved the deal, according to a statement Wednesday. Although the offer was unsolicited, Michaels Chairman James Quella said it made sense. The company’s management “firmly believes Apollo’s offer represents a compelling value to our shareholders.” Apollo’s interest in Michaels comes on the heels of the company’s best annual stock performance since its latest initial public offering in 2014. Shares rose 61% last year, fueled by all the crafting items and home decor purchased by families stuck at home during the pandemic. That marked a major turnaround from prior years, when the growth of Amazon.com Inc. and flagging sales had forced the chain to shutter dozens of locations.
UK Businesses Told to Review COVID-19 Claims as UK Cracks Down on Fraud
Brief: British businesses were on Wednesday urged to review how they claimed for government support during the coronavirus pandemic as the country launched a 100 million pound ($140 million) taskforce to tackle fraud. Britain’s spending watchdog said last October that companies may have fraudulently claimed up to 3.9 billion pounds in public money by accepting funds from schemes such as salary support packages while ordering furloughed staff to continue working during national lockdowns. Unveiling the Taxpayer Protection Taskforce in Wednesday’s budget, Finance Minister Rishi Sunak said the new body would investigate, prosecute and recover unlawfully claimed payments through schemes such as furlough and the Self-Employment Income Support Scheme (SEISS).
Pandemic Puts 1 in 3 Nonprofits in Financial Jeopardy
Brief: More than one-third of U.S. nonprofits are in jeopardy of closing within two years because of the financial harm inflicted by the viral pandemic, according to a study being released Wednesday by the philanthropy research group Candid and the Center for Disaster Philanthropy. The study's findings underscore the perils for nonprofits and charities whose financial needs have escalated over the past year, well in excess of the donations that most have received from individuals and foundations. The researchers analyzed how roughly 300,000 nonprofits would fare under 20 scenarios of varying severity. The worst-case scenario led to the closings of 38% of the nonprofits. Even the scenarios seen as more realistic resulted in closures well into double digit percentages. Officials of Candid, which includes the philanthropic information resources GuideStar and Foundation, and the Center for Disaster Philanthropy, which analyzes charitable giving during crises, said the most dire scenarios could be avoided if donations were to increase substantially — from the government as well as from private contributors.
SocGen to Cut Investment Bank Bonuses 20% After Trading Losses
Brief: Société Générale SA will cut the bonus pool at its investment bank by about 20%, after trading hits in 2020 handed the group its first losing year in more than three decades. Across the company, payouts are being reduced by an average of 15%, according to a person familiar with the matter, who asked not to be named discussing confidential matters. SocGen’s markets unit, which posted a net loss last year, saw even bigger pay reductions, with some equity derivatives traders facing a bonus cut of more than 80%, another person said. The sweeping cuts cap a damaging year for Chief Executive Officer Frederic Oudea, who has seen shares of the French lender slump by more than two thirds since he took over in 2008. SocGen’s payouts are likely to be among the lowest among global investment banks after most peers seized on the pandemic market swings to deliver trading and deal-making gains. The bank’s traditionally-robust equity trading unit delivered a 49% revenue drop in 2020. On Wall Street, investment banks posted double-digit gains and bonuses to match.
Asset Managers Ended 2020 With Record Revenues
Brief: Publicly traded asset managers’ revenues and profit margins were up in the fourth quarter, but most gains are going to a small group of firms that have been able to capitalize on trends like investors’ appetite for alternatives, according to an analysis from strategy consultant Casey Quirk, which is owned by Deloitte. “At the beginning of 2020, we would have expected to see more margin and revenue pressure than we’ve seen. But it’s been a positive year for the industry writ large,” said Amanda Walters, a principal at Casey Quirk, in an interview. “The dispersion of winners and losers, however, is more pronounced and accelerating.” Walters said the consultancy included five publicly traded alternatives firms in its most recent analysis. “That group of firms is doing very well,” she said. “But it’s also larger traditional firms that have both active and passive, are managing their expense base efficiently, and have a significant portion of their asset base aligned with equity markets. So you can’t say only the alternatives firms are winning.” According to Walters, the asset managers that are winning can also be characterized as having profitable growth. “We’re not seeing them cutting their way to profitability,” she said.
