FINSUM

FINSUM

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Tuesday, 12 October 2021 20:45

How Regulation is Driving ESG Investment

(New York)

ESG is taking over Europe and PWC is forecasting that ESG could make up €775.7bn to €1.2tn by 2025. That figure would make ESG 27-42% of Europe’s entire private financial market, for context it is about 15% currently. Driving that projection is the EU’s new sustainable finance disclosure regulations. Almost a third of the firms surveyed cited regulation as a primary force pushing their ESG investment. Sustainable investing in Europe is also seeing large growth in a public investments like pension funds. Finally, PwC said they see a new wave of private funds coming in the future rather than a re-rigging of existing financial funds to be more ESG friendly.


FINSUM: Public investment is a critical piece of Europe’s ESG investment, which is why it was very important when the U.S. opened the doors for public sustainability investment recently.

Monday, 11 October 2021 21:00

Goldman Warns of Big US Default Risk

(New York)

The debt clock is reading ten minutes to midnight for Congress which seems gridlocked in a game of chicken that could cost the public. Goldman Sachs issued an internal note late last week that there is a material risk that congress fails to reach a consensus on increasing the debt limit. Mitch McConnell is currently reviewing two plans to present Dems that would allow them to reach a consensus on raising the debt ceiling. Treasury Secretary Yellen reiterated that the government will be cash poor to pay the bills if Congress fails to raise the ceiling. Some are calling for the Treasury to mint a $1 trillion coin in order to finance if Congress doesn’t raise the debt ceiling but Goldman says this scenario is unlikely.


FINSUM: Congress always comes around to raise the debt ceiling, but a new wave of Democrats and Republicans pose new risks that a mutual agreement can be met.

Monday, 11 October 2021 20:58

The Fed Prepares for Climate Change

(Washington)

Fed Governor Lael Brainard issued comments on Thursday regarding the Fed’s position on climate change. Brainard said the Fed is developing a series of scenario tools to model the risk of climate change to the financial system. The models will see how our financial system holds up to hypothetical climate change hazards such as floods, droughts, and fires. This will bring the Fed closer to the rest of the leading central banks around the world, such as the ECB and Bank of England, who already are doing this at a minimum. Many progressive Democrats have been critical of the Powell Fed for their lack of green policy and financial regulation and this is a correction step that may allow Powell to get renominated in 2022.


FINSUM: These action steps are important by the Fed, but they will not be accompanied by any regulatory steps, meaning banks won’t be punished for over-exposure to climate risks. Thus, the risk to asset prices seems lower.

Monday, 11 October 2021 20:56

Bond Investors are Flocking Here

(New York)

Investors in India have by in large part stayed away from their own high yield corporate bonds, but wary investors from China have done the opposite. India’s high yield bond issuers set a $9 billion-dollar record from international investors which tripled last year’s inflows. Many of these investors are coming from China, specifically Evergrande, whose liabilities alone double India’s entire corporate debt market. Many investors are worried that other sectors in China’s economy may come to suffer from Xi Jinping’s ‘common prosperity’. In the meantime, there are still risks to India’s debt, most notably energy prices, as India imports most of its energy. Higher energy prices increase input costs, which could cut margins.


FINSUM: Developing countries outside China are all receiving inflows in corporate and non-corporate debt investments with China’s turmoil.

(Washington)

Joe Biden has picked Lisa Gomez to head the Employee Benefits Security Administration at the Department of Labor. And speaking to senators this week, she made a comment which clearly signals the direction of the Department. She said “there’s nothing that is more central to ERISA than defining who is a fiduciary”. Speaking about her pending work for the DOL, she said she plans “to be briefed on the efforts of looking at the definition of a fiduciary in different contexts, and taking another look at the conflict of interest rule and how it would apply in different situations”. She continued “Determining exactly who is a fiduciary in different contexts … has been the source of disagreement and it’s been a long road to get there”.


FINSUM: The writing is on the wall at the DOL and SEC. The Biden administration is starting to flex its muscle and will beef up regulation.

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…