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Our briefing for Wednesday, November 3, 2021:
Nov 3, 2021 4:05:35 PM
- In the United States, a recent Deloitte survey is showing a majority of American travellers plan to spend the same or more on trips during the upcoming Thanksgiving and Christmas holidays than what they spent before the pandemic. Deloitte surveyed just over 6,500 Americans about their travel plans in September and noted about 42% plan on travelling by the end of the year, and at least 75% of those are planning to add at least an extra day to their plans due to the remote-work flexibility. However, the survey also noted what the pandemic did to deepen the divide between the rich and the poor. The poll showed many high earners planned to mix their work and pleasure while a third of low-income Americans, who aren’t afforded remote work flexibility, don’t plan on travelling at all.
- Canada’s largest airline is short 800 workers as Air Canada suspended employees who are not fully vaccinated. The move is in line with federal rules laid out by Prime Minister Justin Trudeau’s Liberal government who announced last month that as of October 30th, Ottawa would require federally regulated air, rail and shipping companies to establish mandatory vaccination policies for their employees. While 800 appears to be a large number, Air Canada executives noted 96% of their 27,000-cabin crew, customer service agents and others are fully vaccinated. Executives also noted while domestic leisure bookings have bounced back, business travel remains down across the board due in part to the persistence of remote work. “We are pretty confident that come 2022 corporate Canada returns to their offices and business travel should return. But no doubt that for us, business has lagged a little bit,” said Lucie Guillemette, Air Canada’s Chief Commercial Officer.
- In the United Kingdom, England’s chief deputy chief medical officer announced Wednesday there are “hard months to come in the winter.” Jonathan Van-Tam told the BBC that he is worried over the increasing coronavirus rates in the country and that too many people believe the pandemic is over. Britain’s government recorded close to 34,000 new COVID-19 infections on Tuesday and 293 deaths, the highest daily death figure since February. The UK was recognized as getting a head start compared to their European counterparts - rolling out its vaccination program quickly and now offering booster shots, including everyone over the age of 50. However, the country has been cautious about vaccinating teenagers and younger people, only giving the green light for authorizing jabs for 12-to-15-year-olds in September.
- India’s locally manufactured COVID-19 vaccine has received the green light for emergency use authorization from the World Health Organization (WHO). Bharat Biotech International Ltd. (Covaxin) received the WHO approval for use in people aged 18 and older on a two-dose schedule with four weeks between shots, according to a statement on Wednesday. The WHO also had impeccable timing for Prime Minister Narendra Modi’s government, who heavily promoted the vaccine, as the agency’s nod of approval came on the eve of Diwali, India’s largest festival.
- The Philippines vaccine rollout is being hampered by logistical bottlenecks and citizen hesitancy, according to government officials. During a virtual briefing on Wednesday, Health Minister Francisco Duque declared that more than 40 million of the Philippines’ 108 million vaccines are either in warehouses, in transit to the archipelago’s remote islands, or waiting to be used in local health offices. In a separate briefing, Undersecretary Myrna Cabotaje said vaccine hesitancy continues to be a major roadblock due to as much as 25% of the population doubting the effectiveness of COVID-19 vaccinations.
- Bloomberg is reporting China’s provinces are fighting COVID-19 more now than at any time since the deadly pandemic was first identified in Wuhan in 2019. The report noted the highly-infectious delta variant has accounted for at least 600 locally-transmitted infections in 19 of China’s 31 provinces. This is bad news for the world’s second largest economy who are still taking the COVID-zero approach in handling the pandemic. Several other countries – with drastically smaller populations such as Singapore, Australia and New Zealand tried the COVID-zero approach only to ditch it as vaccines became more readily available. China’s Ministry of Commerce urged residents on Tuesday to stock up on necessities for the fall and winter and be prepared for future outbreaks that could trigger snap lockdowns.
Covid-19 – Due Diligence And Asset Management
Fed to Start Tapering Bond Purchases Later this Month as it Starts Pulling Back on Pandemic Aid
Brief: The Federal Reserve announced Wednesday it soon will begin reducing the pace of its monthly bond purchases, the first step towards pulling back on the massive amount of help it had been providing markets and the economy. Tapering of bond purchases will start “later this month,” the policymaking Federal Open Market Committee said in its post-meeting statement. The process will see reductions of $15 billion each month -- $10 billion in Treasurys and $5 billion in mortgage-backed securities – from the current $120 billion a month that the Fed is buying. The committee said the move came “in light of the substantial further progress the economy has made toward the Committee’s goals since last December.” The statement, approved unanimously, stressed that the Fed is not on a preset course and will make adjustments to the process if necessary. “The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook,” the committee said.
Balyasny, BlueCrest, ExodusPoint Ground Traders over Losses
Brief: The hedge fund traders watched as a nightmare scenario played out in the world’s bond markets. From Australia to the U.K. to the U.S., government bond yields abruptly moved against them last week amid growing speculation that central banks will accelerate plans for raising interest rates in the face of persistent inflation. The losses piled up -- and for a few became so big that the firms halted some trading to contain the damage. Balyasny Asset Management, BlueCrest Capital Management and ExodusPoint Capital Management each curtailed the betting of two to four traders after they hit maximum loss levels, according to people with knowledge of the matter, who asked not to be identified because the information is private. That step stopped traders from changing their positions, an extraordinary risk-management move used so firms can reassess trades or unwind them. ExodusPoint lost about $400 million last month, leaving it down 2% in October, people said. The fund is still up 2.8% year-to-date.
S&P is up 37% Since Biden’s Election one year ago, Setting Presidential Record
Brief: The S&P 500 just capped its best year ever following a U.S. presidential election, surging 37% since Joe Biden won the vote. The benchmark index gained more in the past year since the 2020 election than any other modern president has seen in their first year in office. But the advance has more to do with the “everything rally” following the vaccine rollout than any specific policy decision, Charles Schwab UK Managing Director Richard Flynn said in a note. “While presidents are always quick to take credit for strong performance and quick to blame their predecessor for poor performance, it is likely that they are responsible for neither,” Flynn wrote. The gains come as the results of Tuesday’s elections offered a warning shot to Biden and the Democrats after Republicans won in key races. While the stock market has rallied to all-time highs, the nation’s mood has been less bullish amid rising prices and mixed economic reports. The last time the S&P 500 recorded a post-election day annual gain above 30% was after Bill Clinton’s re-election in 1996. The index gained 21% during Donald Trump’s first year.
US Service Sector Expands at Record Pace in October
Brief: The rate of expansion in the U.S. services sector, where most Americans work, hit a record high in October as demand remained strong even as supply chain problems persisted. The Institute for Supply Management reported Wednesday that its monthly survey of service industries — which includes restaurants and bars, trucking companies, hotels and many other businesses — jumped to a reading of 66.7 from September’s reading of 61.9. Although business activity, new orders, supplier deliveries and backlog of orders all surpassed previous records, sticky issues that have plagued almost every kind of economic activity since infections began to ease in the U.S. continued: labor shortages, supply chain bottlenecks and higher prices. “The broad picture painted by this report is that the economy is overheating,” said Stephen Stanley, chief economist for Amherst Pierpont Securities. “Demand is overwhelmingly strong at the same time that supply is constrained. Still, I am not sure that even a fully-functioning supply side, with more labor and a resolution of snags would be able to handle the pace of demand right now.”
New Priorities for Family Offices and UHNW Clients Revealed in Global Survey
Brief: Private market investments reign supreme with a sharp increase in interest in this area over the past five years to top position of importance, according to Global wealth manager Julius Baer's just published 2nd Annual Family Barometer 2021 which highlights the top priorities for UHNW families right now. The survey covered more than 800 wealth management industry experts who work with and advise UHNW clients and their families. However, it is sustainable and impact investing and ESG-related topics which have grown the most (17%) in terms of importance over the past five years when it comes to investing… Against the backdrop of Covid-19, health has replaced regulatory aspects as the third most important topic when it comes to topics ‘beyond investments' for families, with 19% of respondents citing it as the most important topic for their clients. Guy Simonius, head of family office service at Julius Baer, said: "Perhaps now is the right time to think about starting a meaningful dialogue with your family and your chosen experts. Experience shows that doing so can bring greater peace of mind and contentment, and can also help to mitigate conflict and bring a family closer together.
