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David Fuller and Eoin Treacy's Comment of the Day
Category - Global Middle Class

    Cost to Bury Carbon Near Tipping Point as Emissions Price Soars

    This article by Rachel Morison and Samuel Etienne for Bloomberg may be of interest to subscribers. Here is a section:

    “We need to see higher carbon prices to make those projects profitable,” said Anders Opedal, chief executive officer of Equinor ASA, which is developing CCS in the U.K., Norway, Germany and the Netherlands. “It actually needs to be more expensive to pollute than actually capture and store.”

    Britain has the most ambitious climate goals of the G-20 nations, targeting a 78% reduction in emissions by 2035. The nation has committed to helping fund two industrial hubs, where heavy industry and power generation can use carbon capture and storage by 2025, with another two by the end of the decade.

    The aim is to scrub as much as 10 million tons of carbon dioxide from the atmosphere every year. Details on how the funding will be allocated are due before December. At today’s power prices, the U.K.’s largest planned project at Drax Group Plc’s biomass station in north England already would be profitable using carbon-capture technology, according to Credit Suisse.

    “We need to be sure we could get those prices over a long time period, but we’re getting pretty close,” CEO Will Gardiner said in an interview on Bloomberg Radio. Drax’s project will start in 2027, and by 2030 it will capture and store 8 million tons of carbon dioxide a year.

    In 2019, the world emitted about 33 gigatons of carbon. Operational projects are capturing just a fraction of that, about 40 million tons, according to Wood Mackenzie. There are 19 large-scale CCS facilities in operation today and another 32 in development, according to Credit Suisse. If these all come online, they could store 100 million tons – a slightly bigger fraction.

    There’s also a chance the technology might not be as effective as promised. The world’s biggest project, at Chevron Corp.’s $54 billion liquefied natural gas plant in Australia, has fallen short of its target to capture 80% of emissions from the plant, burying just 30% over five years.

    “The tech isn’t there yet for large-scale adoption, but our industry has to start changing how we operate,” said Andrew Gardner, chairman of Ineos Grangemouth Ltd., which is working with Royal Dutch Shell Plc on the Acorn project in Scotland that’s scheduled to start in 2027.

    The system developed by Oslo-based Aker Carbon Capture ASA costs between 60 euros and 120 euros per ton, CEO Valborg Lundegaard said. That means CCS could be nearing a crossover point.

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    China coronavirus infection closes shipping terminal at massive Ningbo-Zhoushan Port as container rates soar

    This article from the China Morning Post may be of interest to subscribers. Here is a section:

    Nair was referring to massive delays at Shenzhen's Yantian port in May and June. Weeks of containment efforts following outbreaks of Covid-19 among dockworkers in China's Pearl River Delta caused global shipping delays, supply-chain disruptions and surging freight costs. The problems have not been fully resolved.

    Lars Jensen, CEO of liner consultancy Vespucci Maritime, also said the Meishan terminal closure could have a similar impact on the Ningbo-Zhoushan Port that Yantian experienced when it was closed for more than three weeks.

    "Significant problems, both for export cargo as well as for the movement of empty containers into the region, would then ensue," he wrote in a LinkedIn post on Wednesday.

    With its zero-tolerance approach to the coronavirus, China is currently carrying out mass testing to contain the spread of the highly infectious Delta variant, which Ningbo authorities said the Meishan worker tested positive for.

    However, the deputy director of the Ningbo Centre for Disease Control and Prevention, Yi Bo, said the worker may have contracted the virus from his interactions with foreign crewmembers of cargo freighters that he had boarded at the port. Video surveillance showed he had close contact with crews.

    Meishan is one of the busiest terminals at the Ningbo-Zhoushan Port, servicing main trade destinations in North America and Europe. In 2020, it handled 5,440,400 TEUs of container throughput, or around 20 per cent of the total container throughput at the Ningbo-Zhoushan Port, according to official statistics.

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    Rand Gains as South Africa Finance Head Pledges Fiscal Restraint

    South Africa’s new finance minister, Enoch Godongwana, has a difficult job ahead: convincing investors that he can help Africa’s most industrialized economy reduce debt while boosting economic growth.

    He took the first step in an investor call Friday, when said there would be no changes to the fiscal framework for Africa’s most industrialized economy. The rand gained and bond yields fell after he spoke.

    “I don’t see much changing in that fiscal framework,” Godongwana said on the call. “There is commitment from myself as the minister of finance and I would imagine from government.”

    The rand reversed losses against the dollar, and strengthened 0.2% to 14.7576 per U.S. dollar by 4:13 p.m. in Johannesburg. Yields on the most-liquid 2026 government fell three basis points to 7.39%.

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    Email of the day on the delta variant

    40 minutes but really good (essential) analysis of where we are now with the virus. Martenson has been an excellent guide throughout. One for the collective perhaps. 

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    Predicting Equity Returns with Inflation

    This article from Research Affiliates may be of interest to subscribers. Here is a section:

    In this article, we document that two derived US inflation variables—inflation cycles and inflation surprises—have been robust predictors of US equity returns. We demonstrate that this predictability translates into new sources of alpha that investors can seek to harvest. In particular, we highlight the signals’ ability to perform during the worst times in the stock market without missing upside opportunities.

    The tail-hedging properties derived from inflation signals are particularly desirable. Hedging positive inflation shocks can be costly when inflation is low.9 For example, strategic allocations to alternative assets, such as commodities, or absolute return strategies as a way to protect against inflation have not all fared well in recent years, with commodity indices down more than 30% versus their 2011 levels. As a result, many asset owners may not be able to stay the course if inflation fails to materialize in the medium term. We find that inflation signals can provide a new tool for investors who wish to hedge their portfolios against inflationary and deflationary risks.

    “The tail-hedging properties derived from inflation signals are particularly desirable.”

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    COVID: 90% of patients treated with new Israeli drug discharged in 5 days

    Thanks to a subscriber for this article from the Jerusalem Post may be of interest to subscribers. Here is a section:

    Arber and his team, including Dr. Shiran Shapira, developed the drug based on a molecule that the professor has been studying for 25 years called CD24, which is naturally present in the body.

    and

    Arber noted that another breakthrough element of this treatment is its delivery.

    “We are employing exosomes, very small vesicles derived from the membrane of the cells which are responsible for the exchange of information between them,” he said.

    “By managing to deliver them exactly where they are needed, we avoid many side effects,” he added.

    The team is now ready to launch the last phase of the study.

    “As promising as the findings of the first phases of a treatment can be, no one can be sure of anything until results are compared to the ones of patients who receive a placebo,” he said.

    Some 155 coronavirus patients will take part in the study. Two-thirds of them will be administered the drug, and one-third a placebo.

    The study will be conducted in Israel and it might be also carried out in other places if the number of patients in the country will not suffice.

    “We hope to complete it by the end of the year,” Arber said.

    If the results are confirmed, he vowed that the treatment can be made available relatively quickly and at a low cost.

    “In addition, a success could pave the wave to treat many other diseases,” he concluded.

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    Investors Are Ignoring a Dangerous Crackdown on Press Freedom

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    Adding press freedom to the list may benefit those seeking investment too. When a newspaper closes, the local government’s borrowing costs rise because diminished scrutiny makes investors less comfortable, a 2019 report published in the Journal of Financial Economics found. 

    Press freedom “is a very foundational thing that needs to be in place before you can have meaningful ESG metrics,” said Perth Tolle, founder of Life + Liberty Indexes, which invests in countries based on third-party rankings of various freedoms. The Freedom 100 Emerging Markets ETF, which tracks Tolle’s index, has no holdings in Turkey or China and also reduced its position in Poland in recent years as concerns have mounted over the country’s erosion of the rule of law. The benchmark MSCI Emerging Markets Index — which Tolle’s index has outperformed this year — has exposure to all three nations. ​

    Most investors simply don’t factor in human rights concerns when it comes to allocating capital, Tolle added.

    “The metrics are out there, the problem with Wall Street is that they don’t make any money out of those, and they don’t like it,” said Tolle, who was born in China and now lives in Texas. “In places that have no press freedom, do you think they’ll have freedom for stock or bond analysts?

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    Philippine Peso Drops Most Since 2013 Ahead of Manila Lockdown

    This article by Lilian Karunungan and Masaki Kondo for Bloomberg may be of interest to subscribers. Here is a section:

    The Philippine peso posted its biggest intra-day decline since 2013 as investors turned cautious ahead
    of a two-week strict lockdown in the Manila capital region starting Friday.

    The peso slid as much as 1.2% to 50.37 against the dollar to become Asia’s worst performing currency on Thursday. Local stocks also declined after rising for three straight days. The peso’s drop comes after Bangko Sentral ng Pilipinas said on Wednesday that a reserve requirement ratio cut could be on the
    table. The central bank is set announce its policy decision on Aug. 12.

    The peso may have weakened on “some positioning ahead of the imposition of the tighter restrictions starting tomorrow,” said Nicholas Mapa, an economist in Manila at ING Groep NV. There’s also “some chatter now also about the RRR reduction from BSP as the central bank appears to have run out of policy rate cuts for now.”

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    Why COVID cases are now falling in the UK - and what could happen next

    This article from the Conversation.com may be of interest to subscribers. Here is a section:

    This lack of long-term protection against infection means that herd immunity is probably impossible and that the virus will become endemic and continue to circulate in human populations. If this happens and the disease then stabilises, such that case numbers are constant across the population, neither increasing nor decreasing, it will have reached what’s called an “endemic equilibrium”.

    So is this what we’re now witnessing? Possibly. One of the basic models of how infectious disease cases change over time is called an SIR model, which looks at how many people are susceptible to a disease, infectious with it or have recovered from it (and so are immune) at any one time.

    With this model, cases increase rapidly at the start of an epidemic as lots of people are susceptible, become infected, and go on to infect other susceptible people. But as infections mount, over time fewer people are susceptible and more have recovered. The rate of growth therefore decelerates, the epidemic reaches its peak, and then case numbers decline to an endemic equilibrium point, where they remain roughly stable.

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