Weekend Bite, a Seeking Alpha Original Series: Zach Stein, Chief Investment Officer at Carbon Collective, joins us this week to break down the recently launched ESG ETF – the Carbon Collective Climate Solutions U.S. Equity ETF (CCSO). Plus, Kim Khan recaps the FOMC meeting, and discusses what to look out for next week with Catalyst Watch.
European Union member states are rushing to complete the eighth round of sanctions against Moscow following an escalation of its war in Ukraine. Vladimir Putin this week announced a “partial mobilization” that will conscript as many as 300,000 troops, while voting just began to annex the four regions of Luhansk, Donetsk, Kherson and Zaporizhzhia, which represent about 15% of Ukrainian territory. The referendums are due to run from Friday to Tuesday, and may be used by Russia to justify further escalations to defend its newly incorporated provinces.
Snapshot: There are many measures being pitched in the latest EU sanctions package, but it could be hard to find a consensus among all 27 members of the bloc. The penalties include removing more Russian banks from the SWIFT international payment system, as well as targeting Russia’s tech, cybersecurity and software industries. Other ideas on the table could center around banning luxury goods and diamond imports, but perhaps the most hard-hitting and controversial sanction would be to impose a price cap on Russian oil.
Details are still being discussed, but the plan aims to cap prices at a level close to the cost of Russian production to dent Kremlin finances. To accomplish this, Europe would restrict the availability of transport and insurance services to shippers that agree to observe the price ceiling (~95% of the world’s oil tanker fleet is covered by the International Group of P&I Clubs in London and companies based in continental Europe). Another proposal is to limit the usage of U.S. financial services that could benefit from the scheme, but many are skeptical about its effectiveness, with some big Russian buyers like China already paying in yuan and rubles.
Tensions: While hawkish countries like Poland and the Baltic states are demanding the new measures, others feel that it could be tough to get anything more than a limited set of penalties. The last attempt to pass a big sanctions package in June led to infighting in the bloc, as countries led by Hungary refused to sign up to a Russian crude embargo until they were granted an exception for pipeline oil. Things may not be better this time around, as EU legislators just voted to declare that Budapest was no longer a “full democracy,” though some say the latest package could get over the line, as it would have much less of an impact on the Hungarian economy than the crude embargo. (13 comments)
Echoes from the hawkish FOMC meeting are still reverberating through markets, with Jerome Powell set to take the stage for the second time this week. The Fed Chair will deliver opening remarks at a “Fed Listens” event at 2 p.m. ET, after doubling down on a “whatever it takes” policy stance to get inflation under control. Fed Vice Chair Lael Brainard and Governor Michelle Bowman will also be at the show in Washington, moderating conversations with leaders from a variety of industries.
Market movement: Going into today’s session, the Nasdaq Composite is down 3.3% for the week, the S&P 500 is 3% lower and the Dow is off 2.4%. Things don’t look any better in the premarket session, with futures tied to the major averages sliding another 1%, while bonds continue to be hit by a brutal selloff. The 10-year Treasury yield is up 7 basis points to 3.78%, on a pace for its biggest weekly rise since April, while the 2-year yield (US2Y) is up 6 basis points to 4.19%, having breached 4.20% earlier.
Resetting expectations: “The forward paths of inflation, economic growth, interest rates, earnings, and valuations are all in flux more than usual with a wider distribution of potential outcomes,” wrote Goldman Sachs strategist David Kostin. On that note, the bank slashed its year-end target for the S&P 500 to 3,600 from 4,300, and said the benchmark could even fall to as low as 3,150 in the event of a serious recession.
Don’t get emotional: “You’ve just got this volatility that nobody seems to be able to get their head around,” said Tim Lesko, Director at Mariner Wealth Advisors. “At some point, they’ll figure out that recession doesn’t mean the end of the world, and they’ll start getting constructive on stocks again, but right now, we’re acting as if the sky’s falling.” (6 comments)
Amazon.com’s (AMZN) initial exclusive Thursday Night Football broadcast – between the Los Angeles Chargers and Kansas City Chiefs – drew in 13M viewers last week, according to analytics firm Nielsen. While the data can be compared to several metrics (same week last year, similar matchups, season averages, etc.), the bottom line is that the online audience figures are roughly in line with those that compare to traditional TV. Amazon is the first streaming service to hold exclusive rights to an NFL game package, in a deal that will cost the tech giant about $1.2B per year through 2033.
Quote: “By every measure, Thursday Night Football on Prime Video was a resounding success,” said Jay Marine, global head of Amazon’s sports division. “The audience numbers exceeded all of our expectations for viewership.”
The deal is already bearing fruit, with Amazon Prime signups going through the roof during the three-hour period of the game. In fact, the new subscriber additions beat those that took place on Prime Day, Black Friday and Cyber Monday – combined. Amazon also partnered with DirecTV (T) in a multiyear agreement for the satellite TV provider to air TNF in more than 300K bars, restaurants, hotels and casinos.
Joining the game: Apple (AAPL) is also upping its sports streaming efforts as it looks to generate more cash flow from an expansion into online services. Tonight’s matchup between the New York Yankees and Boston Red Sox will only be streamed on Apple TV+, meaning users will need an Apple ID to watch the game (which is still being broadcast for free for a limited time). Besides being one of the fiercest rivalries in all of American sports, the Yankees just clinched a playoff spot and slugger Aaron Judge is closing in on a home run record. (48 comments)
Electric vehicle investors are gleaning some important data from the latest update to the IEA’s “Tracking Clean Energy Progress.” The annual report assesses 55 components of the energy system – sectors, technologies, infrastructure and mitigation strategies – to evaluate progress towards reaching key medium-term milestones by the end of the decade. It’s part of a broader effort of “Net Zero Emissions by 2050” that seeks to limit the rise in global temperatures to 1.5°C through innovation, behavioral change, sustainable bioenergy and international collaboration.
Snapshot: EV sales doubled worldwide last year to account for almost 9% of the total car market. The trend is picking up again this year as 2M EV sales were recorded during the first quarter, marking a 75% increase compared to the first three months of 2021. In fact, the IEA expects to “see another all-time high for electric vehicle sales [in 2022], lifting them to 13% of total light duty vehicle sales globally.”
“Electric vehicles are the key technology to decarbonize road transport, a sector that accounts for 16% of global emissions,” according to the report. “The Net Zero Emissions by 2050 Scenario sees an electric car fleet of over 300M in 2030 and electric cars accounting for 60% of new car sales.”
Other highlights: The global EV fleet in 2021 displaced around 0.3 Mb/d of oil by consuming about 50 TWh of electricity, which accounts for less than 0.5% of current total final electricity consumption worldwide. The energy density of EV batteries has also been rising over the past year, while there has been a doubling in the market share of lithium iron phosphate cathodes, which require no nickel or cobalt. Meanwhile, deployment of publicly available EV charging points increased by close to 40% in 2021, with 500K public charging points installed, or more than the total stock of chargers available in 2017. (25 comments)
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