rob zdravevski's blog

ESG opposition heats up

The ESG investment tug of war led by ideology, favours and politics will be ultimately weighed up in returns.

The Florida State Board of Administration passed a resolution Tuesday that all decisions related to the investment management of the Florida Retirement System will not include ESG considerations.

https://www.pionline.com/esg/florida-state-board-backs-desantis-resolution-ban-esg-considerations-managing-pension-plan

Make your own case for or against ESG investing, advocacy or activism, but this ‘decree’ just sounds extraordinary.

Or does it?

Does this decision tell us that ESG investing is deemed to lose its lustre?

It is within the trustees realm and objective to set investment strategy but one can’t help Governor Ron DeSantis’ ability to influence the other two trustees,

https://www.sbafla.com/fsb/Trustees,CouncilsCommittees/Trustees.aspx

The irony of this announcement lies in the ‘G’ of ESG.

The 3 trustees are all politicians from the current sitting government.

That can hardly count as prudent fiduciary governance.

If you take a look at the trustees and boards of government employee pension funds such as those in Australia……no politicians appear in the line up.

That can’t say they are devoid of influence, however none of them are the Governor, Premier, Treasurer nor Attorney General of the state.

Are the trustees telling us……

using ESG screens exclude the state’s pension money from other investing opportunities?

they think that exposure to ESG qualified corporations won’t produce an adequate return for the pensions target?

they oppose supporting the Wall Street ESG movement?

they are influenced by lobby groups supporting energy, mining and firearms industries?

After all, companies which aren’t scoring well in ESG rankings are/will have difficulty financing and shareholders.

This is part of my recent notes where I have mentioned the importance of watching “the financing mix, the shareholder mix and the energy mix’.

$240 billion of Florida’s state retirement money can help, not withstanding the other 15 states whom have signed anti-ESG bills.

https://www.reuters.com/legal/legalindustry/challenge-investing-face-state-anti-esg-legislation-2022-08-24/

Whether or not, DeSantis wins the Republican presidential nomination, look for Ashley Moody (Florida’s Attorney-General) to get a plumb job in the ’next’ republican federal government.

And there are always jobs waiting when your political career is over, but before that comes political donations.

August 26, 2022

by Rob Zdravevski

rob@karriasset.com.au

#ESG

#Florida

Inflation for some and not for others

In 2018, the price of retail electricity in Spain was 24 cents per kilowatt/hour.

Tomorrow, the Spanish news on TV tells me it will be 43.6 cents per kw/h.

In Germany, it will be 62.4 cents kw/h

In Western Australia, I was also paying 24 cent kw/h in 2018.

Today, my retail electricity bill is 26.6 cents kw/h.

August 24, 2022

by Rob Zdravevski

rob@karriasset.com.au

Macro Extremes (week ending August 19, 2022)

The following assets (on a weekly timeframe) registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.

Extremes “above” the Mean (at least 2.5 standard deviations)

AUD/GBP (2nd consecutive week)

Nikkei 225

Overbought (RSI > 70)

Dutch TTF Gas

Japan Korean LNG Marker price

The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Istanbul Stock Exchange (BIST)



Extremes “below” the Mean (at least 2.5 standard deviations)

Japanese 10 year government bond yields

U.S. 10 year minus 5 year government yield spread

Oversold (RSI < 30)

U.S. 5 year minus U.S.3 month government bond yield ‘spread’

Hot Rolled Coiled Steel

Tin

Oats

EUR/USD

DKK/USD

KRW/USD

INR/USD

The Oversold Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Chinese 10 year government bond yields 

Notes & Ideas:

The big news over the past week included; gas and coal prices extending their rise while many other commodities continued to weaken and the surge in the U.S. Dollar, as we saw various currency crosses return to the extreme list.

The larger currency drops occurred in the Kiwi, the Aussie, the Pound Stirling and the Chilean Peso.

We saw a petering of the equity rally amongst small capitalised U.S. stocks. This was timed with my recent notes that this rally ‘may be done’ and one that it to be rented and not owned.

The U.S. yield curve moved out of Oversold territory, moving from last weeks close of 0.42% (the intra-week low was -0.51%) to its current -0.26% level. 

Another notable higher move in yields was the Japanese 10’s rising from 0.16% to 0.19%. I’d count a 21% move as notable.

The Copper /Gold ratio is worth watching a barometer of the health of the economy.

On a weekly basis, we may see the early start of a weaker trend in Gasoline although that’s not confirmed.

Oats fell enough to be Oversold and mean revert to its 200 week moving average.

Lumber have given up two-thirds of last week’s 23% advance.

Sugar had a outside bearish reversal week.

The TAIEX has registered a rare 7 consecutive weekly advance.

The larger advancers over the past week comprised of; 

Australian Coking Coal 9.5%, Rotterdam Coal 5.9%, China Coal 2.5%, U.S. Dollar Index 2.3%, Gasoil 4%, Copper/Gold Ratio 2.9%, Heating Oil 5.2%, JKM KNG9.9%, Natural Gas 6.5%, Cotton 4.6%, Dutch TTF Gas 18.7%, Istanbul BIST 5.1% and Australia’s ASX 200 rose 1.2%. 

The group of decliners included;

Aluminium (2.1%), Baltic Dry Index (13.4%), WTI Crude (1.8%), Gold (2.9%), Lean Hogs (6.9%), Hot Rolled Coil Steel (3.1%), Coffee (4.1%), Lumber (14.6%), Orange Juice (6.2%), Palladium (4%), Platinum (7.4%), Silver (8.5%), Brent Crude (2.1%), Silver in AUD (5.2%), Gold (3.1%), Corn (2.2%), Oats (9.4%), Soybean (3.5%), Wheat (4.3%), AUD/USD (3.4%), EUR/USD (2.2%), GBP/USD (2.5%), NZD/USD (4.3%), CLP/USD (7.9%), KBW Bank Index (2.4%), DAX (1.8%), DJ Transports (2.5%), MIB (1.9%), HSCEI (2%), HSI (2%), Nasdaq 100 (2.4%), Russell 2000 (2.9%), SOX (3.7%), Nasdaq Biotech Index (3.8%) and the Nasdaq Composite fell (2.6%)

August 21 2022

by Rob Zdravevski

rob@karriasset.com.au  

Copper/Gold ratio lows match those in stocks

Oversold moments in the Copper/Gold ratio synchronises with buying ‘troughs’ in the S&P 500 Index.

If you remember the extreme pessimism felt through May and June 2022, the Copper/Gold ratio is one tool to add to your analysis arsenal which can help quantify that subjective ‘sinking’ feeling, when it arises again.

August 16, 2022

by Rob Zdravevski

rob@karriasset.com.au