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Our briefing for Wednesday October 14, 2020:
Oct 14, 2020 3:59:55 PM
- With the United States just over a month out from their traditional Thanksgiving holiday – a time when many families gather together – the director for the US Centers for Disease Control and Prevention (CDC) is sounding the alarm on small gatherings. In a call with America’s state governors on Tuesday, Dr. Robert Redfield said while the CDC is seeing a higher degree of safety in mitigation in the public square, “what we’re seeing as the increasing threat right now is actually acquisition of infection through small household gatherings. Particularly with Thanksgiving coming up, we think it’s really important to stress the vigilance of these continued mitigation steps in the household setting.” The Thanksgiving holiday in the United States is often considered one of the busiest travel times of the year in the country as students return home from university and gather with their families.
- In Canada, during a radio interview Wednesday, Prime Minister Justin Trudeau indicated he plans to keep the land border closed with the United States as long as coronavirus cases remain elevated in America. “We have committed to keeping Canadians safe and we keep extending the border closures because the States is not in a place where we would feel comfortable reopening those borders,” said Trudeau. Canada and the United States governments have renewed the closure on a monthly basis since March with non-essential travel currently restricted until October 21st. While Prime Minister Trudeau has valid concerns with the United States, Canada too, is in rough shape when it comes to COVID-19 outbreaks suffering higher numbers now, then the initial first wave in some provinces.
- United Kingdom Prime Minister Boris Johnson didn’t take long to nix the plan of a “circuit breaker” lockdown pitched by government opposition. “He [Labour leader Keir Starmer] wants to close bars, he wants to close businesses in areas across the country where incidence is low… and yet he voted to do nothing last night in the areas where the incidence is highest.” The last night Prime Minister Johnson is referring to is a vote on the latest coronavirus-related restrictions, which the Labour party didn’t support. Prime Minister Johnson has defended his government’s latest strategy, which is a three-tier approach and is looking to avoid a full second lockdown.
- In France, President Emmanuel Macron is set to address the nation in a televised appearance on Wednesday where he is expected to install further restrictions to help curb the recent surge in coronavirus infections. Local media have speculated President Macron will introduce a night-time curfew and/or limit gatherings in the worst affected regions. Cases have been rising steadily rising for weeks with doctors and nurses in large cities like Paris and Nice expressing concerns that their intensive care units will soon be overwhelmed.
- Russia announced on Wednesday it has approved a second COVID-19 vaccine as the country deals with its largest daily case count to date. The new vaccine, developed by Siberia’s Vector Institute completed early stage trials last month, but similar to the Sputnik V vaccine approved in August, was given approval without waiting for the results of large-scale trials in thousands of patients. The Sputnik V vaccine’s green light was criticized by many scientists in other countries.
- Bloomberg is reporting China is planning with one of its leading vaccine developers to inoculate students going overseas with COVID-19 shots that have yet to receive regulatory approval. China National Biotec Group Co., a subsidiary of state owned Sinopharm Group have two vaccines already in the works that are still in their third phase of testing but were already authorized emergency use in the country with thousands of people already inoculated.
Covid-19 – Due Diligence And Asset Management
Goldman’s Trading Business Returns to Former Glory During Pandemic Stress
Brief: Goldman Sachs Group Inc on Wednesday posted its best quarterly performance in a decade by some measures, as trading moved back into the limelight and its lack of a big consumer business switched from a curse to a blessing. The Wall Street bank posted a quarterly return-on-equity of 17.5%, its highest since 2010. Investors closely track that figure because it shows how well a bank uses shareholder money to produce profits. Goldman also boasted record earnings per share, beating analyst expectations by a wide margin. Its performance was driven in large part by a 29% jump in trading revenue, as clients responded to news about the coronavirus pandemic by shifting their portfolios. While rivals including JPMorgan Chase & Co have also benefited from the markets boom this year, they are far more exposed to vulnerable consumers and businesses suffering from unemployment and pandemic lockdowns. Goldman’s consumer bank is relatively tiny. “Simply stunning results,” Credit Suisse analyst Susan Roth Katzke said in a report.
Fortress Delays Pricing of $3.2 Billion Vegas Train Deal
Brief: Fortress Investment Group delayed the pricing of $3.2 billion of municipal bonds to build a passenger railroad between southern California and Las Vegas, a sign that investors were hesitant to finance such a speculative project at a time of deep economic uncertainty. The company boosted the equity contribution to the project by $500 million, among other changes, according to updated documents released Wednesday. Lead underwriter Morgan Stanley had planned to price the deal Wednesday, according to a pricing wire viewed by Bloomberg. The offering has now been postponed with no new date set, according to people familiar with the matter who asked not to be identified because the discussions are private. The deal is listed as day-to-day. Samantha Kreloff, a spokesperson for Morgan Stanley, and Ben Porritt, a spokesperson for Fortress’s Brightline Holdings, declined to comment. The company has been holding investor calls since at least the last week of September, when offering documents were released. Investors were pitched last week on yields ranging from 7% to 7.5% depending on call date, with final maturity in 2050, for the largest offering of unrated municipal securities. Updated documents Wednesday estimated a 7.25% interest rate.
Nearly Nine of 10 Workers Want to Keep Work-From-Home Option: Survey
Brief: Nearly nine out of 10 workers want to be able to choose whether to work from home or the office once COVID-19 workplace restrictions ease, and have greater autonomy over their hours, according to research from Cisco Systems CSCO.O. The pandemic has rapidly shifted attitudes towards home working, the research showed, with two thirds of workers developing a greater appreciation of the benefits and challenges of doing their jobs remotely. Even though only 5% of those surveyed worked from home most of the time before the lockdown, now 87% of workers wanted the ability to choose where, how and when they worked - blending between being office-based and working remotely, Cisco said in a report issued on Wednesday. Cisco Vice President Gordon Thomson said companies would have to reconfigure how they operate to help meet the new demands of workers, who prioritised effective communication and collaboration above everything else. He said technology would also be used to ensure employees were safe and their data was secure in their working environment, whether in the home or the office.
Aviva Investors Sees Reasons to be More Confident About the Recovery
Brief: Aviva Investors, the global asset management arm of Aviva, expects the economic recovery that began in May to continue in the rest of the year and into 2021. Although further waves of Covid-19 virus infections have emerged, they should be successfully countered by limited and targeted restrictions on activity, avoiding the need for the re-imposition of full national lockdowns. As a result, downside risks to activity have diminished since the summer, while the upside case would be further enhanced by the eventual development and distribution of effective vaccines in early 2021, alongside extensive monetary and fiscal policy support. While there is considerable uncertainty about timings, the contours of a post-Covid “new normal” should come into sharper focus in coming quarters. The ongoing economic revival will rely on continuing policy support in the form of loose monetary policy – conventional and otherwise – and generous fiscal support and stimulus for both businesses and workers. If sustained, the combination of loose monetary policy – which is increasingly geared to achieving higher inflation than in the past decade – and expansionary fiscal policy has the potential to bring long-lasting material changes for economies and global financial markets.
Ray Dalio Donates US$50M to Fight Health-Care Injustice
Brief: Bridgewater Associates founder Ray Dalio is giving US$50 million to New York-Presbyterian Hospital to fund a center dedicated to health equity and justice, at a time when the COVID pandemic has underlined the stark racial disparities in the U.S. The Dalio Center for Health Justice, a research and advocacy organization, will focus on reducing differences in access to quality health care that overwhelmingly affect communities of color, New York-Presbyterian and Dalio Philanthropies said in a statement. The hospitalization rate from COVID among Black and Hispanic individuals has outnumbered that of Whites and non-Hispanics by a factor of at least 4.6, according to data from the Centers for Disease Control and Prevention. The death rate of Blacks has been more than twice that of Whites. “Access to equal health care and equal education are fundamental requirements of a just society,” Dalio said in a Zoom interview. COVID emphasized the urgent need to address disparities in health outcomes between racial groups that are shaped by everything from differences in treatment protocols to data collection, he said. “There’s so much work to be done.” Julia Iyasere, an internist and Columbia Business School graduate, will head the center. As the child of immigrants with a multiethnic background, Iyasere said she witnessed firsthand various forms of health-care injustice and its consequences.
Fledgling Private Equity Firms Falter as Virus Curbs In-Person Wooing
Brief: Private equity fund investors have been favoring established buyout firms over first-time managers in recent months, as the challenges of carrying out due diligence remotely during the COVID-19 pandemic reduce their appetite for risk. Out of the $127 billion raised by buyout firms between July and September, only $5.8 billion went to managers raising funds for the first time, the lowest level since 2013, according to industry data provider Preqin. Some private equity fund investors said curbs on business travel were limiting their ability to familiarize themselves with new fund managers, and pushed them toward the relative safety of established players. “It is definitely a higher bar in this environment because you can’t have in-person meetings, you can’t have a dinner with the manager, you can’t really get to know the person,” said Kelly Meldrum, head of primary investments at Adams Street Partners, a $41 billion “fund-of-funds” manager that invests in private equity funds on behalf of institutional investors. In the third quarter of the year, Blackstone Group Inc BX.N, the world's largest private equity firm, closed its fourth real estate debt fund after collecting $8 billion from investors. KKR & Co Inc KKR.N also raised $950 million for its second real estate credit fund. Few first-time managers achieved the same. Among them were Andros Capital Partners, which closed a $250 million fund focused on the energy sector, and Benford Capital Partners, which raised $130 million to buy small lower middle market businesses.
