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As momentum moves toward clean energy, coal changes Some unexpected staying power.
What is happening: Big banks like Goldman Sachs have pledged to divest from dirty energy sources, but news of the end of coal power appears premature.
Smaller funds such as Javelin Global Commodities (created by two ex-Goldman traders) have emerged to fill the void in coal investments. In the eight years since its inception, the fund has grown in value to more than $1 billion and has become the leading US coal exporter.
According to a recent Bloomberg report, the company benefited significantly after Russia’s invasion of Ukraine made record profits last year, as Europe struggled to find the energy it needed elsewhere. .
A new report from the International Energy Agency found that global coal demand is set to reach an all-time high in 2022 amid the energy crisis, breaking the previous record set in 2013.
While the IEA believes coal consumption may soon reach its peak along with oil and gas demand, trends so far this year tell a different story. United States thermal coal exports in the first eight months of 2023 reached their highest level since 2018, according to new data. Exports increased by 20% compared to the same period last year as Asian countries increased demand for coal.
The green transition in American manufacturing also presents a bit of a paradox. For example, Panasonic built a new electric vehicle plant in Kansas to aid the transition to clean energy. But the factory’s huge energy needs have prompted the county where the factory is located to extend the life of the local coal plant.
Even as green initiatives are thriving, coal remains a vital part of our energy mix.
why it matters: Coal, the most carbon-emitting and dirtiest energy source, is the largest contributor to human-caused climate change.
Big companies and banks have promised to phase out investments in fuel, but these efforts are often riddled with flaws.
For example, banks may restrict financing to specific projects involving coal, but will not refuse general purpose loans or deals for the entire company.
Some banks will not finance a company that derives more than 25% of its revenue or production from coal, but some of the world’s largest coal developers are massive, diversified organizations. Glencore, one of the world’s largest coal producers and exporters, which is funded by nearly every major bank in the US, earned only 24% of its industrial revenue from the fossil fuel in 2021. The rest came from copper, zinc and other metal mining and marketing.
At the same time, corporate commitment to strengthening ESG – environmental, social and governance factors – may diminish. Mentions of “ESG” peaked in the fourth quarter of 2021, when nearly 160 companies listed on the S&P 500 index brought up the term in their earnings calls. Since then, mentions have declined in four of the last five quarters.
It’s been a bad week and a bad month for stocks. Yesterday was no different.
My colleague Crystal Hur reported that stocks fell on Tuesday after a series of economic data raised concerns about the outlook for the US economy and further interest rate hikes by the Federal Reserve.
The benchmark S&P 500 index slipped 1.5%, its lowest level since June. The Dow Jones Industrial Average fell 388 points, or 1.1%, its biggest one-day decline since March. The Nasdaq Composite lost 1.6%.
The S&P 500 is now below the range it crossed earlier this summer to enter bull market territory, representing a climb of more than 20% from its most recent low last October. However, the stock market is still in a bullish phase – it would have to fall 20% from its peak to enter bearish territory.
Why is this happening: Investors are excited after the Fed signaled last week that it may raise interest rates again this year and cut rates sooner than expected. That pushed yields to their highest level in decades, as investors recalibrate their expectations about how long rates will stay high.
CNN’s Fear and Greed Index, which uses seven market indicators, fell to a “fear” reading of 26, just above “extreme fear.” That’s the index’s lowest level since March, when the collapse of regional lenders Silicon Valley Bank and Signature Bank roiled financial markets.
Housing data released Tuesday morning also showed that new home sales fell 8.7% in August compared to July, as mortgage rates soared above 7% to their highest level in decades.
At the same time, U.S. home prices hit a record high in July, according to the latest Case-Shiller Home Price Index, marking the sixth consecutive month of increases as the low supply of homes continues to push prices higher.
“The Fed will likely view a resurgence in home prices as a reason to keep interest rates higher for longer,” said Bill Adams, chief economist at Comerica Bank. “The Fed cannot ignore the impact of home prices on the cost of living.”
government shutdown: The possibility of a government shutdown is also looming on Wall Street as the fiscal year fast ends on Sept. 30 without any spending agreement.
Moody’s warned on Monday that such an event could be negative for the US credit rating, which Fitch had already downgraded earlier this year after the federal government avoided a debt ceiling breach.
The Hollywood writers’ strike has finally ended after 148 days.
Leaders of the Writers Guild of America have voted unanimously to authorize their members to return to work after a tentative agreement reached Sunday between union negotiators and Hollywood studios and streaming services, ending months of disruption to the industry. The strike has effectively ended.
The tentative agreement reached earlier this week marks a turning point for Hollywood film and TV studios as the WGA and SAG-AFTRA, both unions that represent actors, fight for higher wages and protections against artificial intelligence. Went on strike this summer.
The contract, which expires in May 2026, includes wage increases, better benefits, protections against the studio’s use of artificial intelligence, guaranteed streaming compensation, long-term employment terms and other perks.
The WGA officially began the strike on May 2, making the strike one of the longest in its history. The current record dates back to 1988 when the WGA ran for 154 days.
The Hollywood strikes have been costly, with a nationwide economic impact of more than $5 billion, according to economists. This pain is felt by more than just Hollywood insiders; Restaurants and businesses that cater to the entertainment industry, such as makeup and custodial work, have also experienced the recession.
Read more here.