☀️☕️ COP28 Carbon Pricing

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• COP28 Carbon Pricing

📊 In the Markets

• Japan not Spiralling

• Advertisers can go X themselves

• US EVs Limit China

📖 MoneyFitt Explains

• 🎓️ Carbon Pricing

💸 Personal Finance Corner

• What Are Fund Distributors and How Do They Work?

📚 What We’re Reading

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COP28 Carbon Pricing

IMF Managing Director Kristalina Georgieva emphasised the importance of carbon pricing🎓 in curbing planet-warming emissions at COP28, the annual two-week-long climate summit held this year in Dubai. 

Long a supporter, she reiterated to CNBC that it incentivises polluters to decarbonise rapidly. The IMF is forecasting an average price of $85 per ton by 2030, up from $20 currently and an earlier forecast of $75.

Georgieva praised carbon pricing's effectiveness, revenue generation and fairness, mentioning the EU's successful Emissions Trading System, the largest in the world (with revenues of $191bn). In contrast, global government subsidies for coal, oil and gas reached $1.3tn last year.

..... ▷ Meanwhile, COP28 President Sultan Al Jaber claimed that there is “no science” behind the need for a fossil fuel phase-out to limit global heating to 1.5C and that a fossil fuel phase-out would hinder sustainable development “unless you want to take the world back into caves”.

This is clearly at odds with what the UN Secretary-General told delegates on Friday.

Al Jaber is also the CEO of the Abu Dhabi National Oil Company (Adnoc), the UAE's giant state oil company. According to IEA and Rystad data, Adnoc has far more planned expansion overshooting net zero amounts after 2023 than any other company in the world. 

 ..... ▷ Then former US Vice President Al Gore showed new data from Climate Trace revealing that China and India's electricity generation, alongside US oil and gas production, were the largest contributors to greenhouse gas emissions post-Paris Agreement. 

Climate Trace's satellite-based monitoring uses 300 satellites and AI to monitor over 352 million sites across ten industries, spotlighting emission trends and emission discrepancies worldwide.

i.e. Nowhere to hide.

The data Gore presented showed the COP28 host UAE's 7.5% rise in emissions vs the 1.5% increase across the world since COP27.

🇸🇬 Singapore: Let’s Get MoneyFitt!

📊 In the Markets

The S&P 500 reached a 2023 high at 4,594.63 points, up 0.59%. As inflation continued to show more signs of cooling, the S&P 500 shot up in November with an 8.9% rise, marking its 18th strongest monthly performance since 1950, with the focus now on when the Fed starts its rate-cutting cycle. 

Fed chief Jay Powell said on Friday that the risks of slowing the economy down more than necessary have become "more balanced" with the risks of not moving interest rates high enough to fully snuff out inflation. Despite Powell emphasising again that it's premature to rule out tightening or discuss rate cuts yet, noting that the "full effects" of the Fed's sharp rate hikes to date have likely not yet been felt, markets saw this as yet another bullish signal. 

Futures prices show, via the CME’s FedWatch tool, traders pricing in a more than 60% chance of a cut in March 2024, up from 21% a week earlier. This is expected to be the first of five cuts by the end of next year. 2-year Treasury yields hit 5 month lows at 4.56%, with the 10-year at 4.21%, while gold soared on the weakening US dollar. 

Japan not Spiralling

Meanwhile, in the parallel universe known as Japan, a board member of the Bank of Japan, the central bank, noted on Saturday that though inflation was now consistently above the central bank’s target rate, it was driven by imported inflation rather than the desired sustained pressure from wage increases.

Wage push inflation is the great fear of most developed economies as it can lead to a wage-price spiral that feeds on itself. That, of course, is precisely what Japan actually needs to pull its moribund economy out from its decades-long period of deflation.

This suggests that Japan’s ultra-loose monetary policy may be around for the foreseeable future, and the tsunami of Japanese money parked elsewhere waiting to come home to higher local interest rates and a rising Yen may stay abroad a while longer. 

Advertisers can go X themselves

Joining former X-advertisers like Disney, Apple, IBM and Warner Bros. Discovery in Elon Musk’s “go fxxx yourself” bucket, Walmart said on Friday it is no longer advertising on the Musk-owned social media platform X. "We aren't advertising on X as we've found other platforms to better reach our customers.” 

As a reminder, when Musk borrowed $13bn from banks at an 11.75% rate to buy what was then known as Twitter for $46.5bn, that debt actually became the company’s debt, meaning that it now needs to pay $1.5bn in interest alone each year. 

This is more than the profits Twitter made in 2019, its most profitable year ever, driven mainly by advertising revenue. 

With monthly advertising income collapsing over 50% and September monthly active users for X down 15+% on the year earlier worldwide (and 18% in the US), this is looking like a stretch, even with many of X’s costs already slashed. 

US EVs Limit China

The Biden administration unveiled rules to limit China's role in the US electric vehicle supply chain, restricting full subsidies (a tax credit of $7,500 per vehicle) for US-made EVs containing Chinese battery components or with affiliations to the Chinese government or a China-based operator.

The new rules come into effect next year and aim to impact tax credits and grants, but EVs without Chinese components will face massive logistical and cost challenges. Car manufacturers have a two-year adjustment period for parts lacking tracing standards.

China's dominance in EV and battery production, as well as processing critical materials like lithium and cobalt, prompted these measures. The Chinese embassy in Washington called the new rules “another example of the US’s practices of unilateralism and economic bullying”.